Bank of Canada cuts key interest rate to 0.5 percent, slashes economic outlook

Energy Associated Press

Canada's central bank has cut its key interest rate as it slashed its economic outlook and predicted a pullback in the second quarter due to the impact of lower oil prices and weaker demand for exports.

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The Bank of Canada on Wednesday cut its target for the overnight rate by a quarter of a percentage point to 0.5 percent.

The bank says its lower outlook for growth has increased the downside risks to inflation.

The bank says Canada's economy is undergoing a "significant and complex" adjustment that requires additional monetary stimulus to help return it to full capacity.

The bank hopes making it cheaper for consumers and companies to borrow money will help.

This is the second time this year the bank has reduced its target for the overnight rate.