Canada's central bank on Tuesday cut its trendsetting interest rate by a quarter point to a record-low 0.25 percent and took the unprecedented step of saying it will likely stay there through June 2010.
The Bank of Canada said the global recession has intensified and it expects the recession in Canada will be deeper than anticipated.
The bank said it is conditional on inflation but they expect the rate to remain at its current level until the end of the second quarter of 2010. It said it is appropriate to provide more explicit guidance than is usual regarding its future path so as to influence rates at longer maturities.
TD Bank chief economist Don Drummond said the central bank's vow to keep the rate that low for a year is unprecedented.
"There's certainly nothing even remotely close to that in Canadian history and I'm not aware of any examples internationally," Drummond said.