Plunging oil prices prompt sudden rate cut from Bank of Canada

Global News

WATCH: Eric Sorensen explains why the Bank of Canada made the surprise interest rate cut and why it matters to you.

The Bank of Canada stunned economy experts and financial markets on Wednesday by cutting its benchmark overnight interest rate by one-quarter of a percentage point, to 0.75 per cent.

That might not sound like much, but the surprise move is the wrong direction financial experts want rates headed in as consumers confront record debt loads. A fresh cut to interest rates will encourage more borrowing.

The immediate risks for the national economy presented by plunging oil prices however outweigh consumer debt considerations, according to the bank.

“This decision is in response to the recent sharp drop in oil prices, which will be negative for growth and underlying inflation in Canada,” it said in a statement.

Canada’s central bank is responsible for influencing interest rates charged by private banks and lenders, as well as…

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Bank of Canada expected to slash outlook most since 2008 as oil rout plunges economy into ‘another era’

Financial Post

Canada’s central bank will make some of the deepest cuts to its economic and inflation outlooks since the 2008 financial crisis, economists said, as the drop in oil prices raises the prospect of lower interest rates this year.

[np_storybar title=”Five reasons 2015 already sucks for Canada’s economy” link=”http://business.financialpost.com/2015/01/20/dont-expect-a-rate-hike-before-2016-canadians-because-2015-already-seriously-sucks/”]The sour start to the year is prompting more economists to push back forecasts for a Bank of Canada rate hike and lower their forecasts for growth and the Canadian dollar. Find out why
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Governor Stephen Poloz will release the bank’s quarterly monetary policy report at 10 a.m. today in Ottawa, along with the January rate decision. The Bank of Canada is expected to keep its main rate at 1%, where it’s been since 2010, according to a Bloomberg survey of 21 economists.

The Canadian dollar fell to its weakest in five years Tuesday on speculation the more than 50% drop…

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Schlumberger to cut 9,000 jobs as low oil prices bite

Financial Post

Schlumberger Ltd., the world’s biggest oilfield-services company, said it would cut 9,000 jobs and take a $1.27-per-share charge in the fourth quarter as it prepares for an “uncertain environment” after the collapse in oil prices.

“In response to lower commodity pricing and anticipated lower exploration and production spending in 2015, Schlumberger decided to reduce its overall headcount to better align with anticipated activity levels for 2015,” the company said. “Schlumberger recorded a US$296-million charge associated with a headcount reduction of approximately 9,000.”

Net income dropped to US$302-million, or 23 cents a share, from $1.66 billion, or $1.26, a year earlier, Houston-and Paris- based Schlumberger said today in a statement on Businesswire. Excluding one-time items, Schlumberger earned $1.50 a share in the fourth quarter, beating the $1.46 average of 34 analysts’ estimates compiled by Bloomberg.

Energy companies, coping with a 42% decline in oil prices during the last three months of…

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