The Bank of Canada is lowering its target for the overnight rate by one-half of one percentage point to 3.5%. The operating band for the overnight rate is correspondingly lowered, and the Bank Rate is now 3.75%.

The tragic acts of terrorism in the United States on Sept. 11 may pose significant challenges to consumer and business confidence in the United States, Canada, and elsewhere.

Accordingly, says the Bank, it is taking this action today to underpin confidence and provide further support for economic growth in Canada. The Bank says its decision to act outside of its normal schedule of announcement dates reflects the need for prompt action to counteract potential effects on confidence in the aftermath of the extraordinary events in the United States.

The major Canadian banks reacted quickly, lowering the prime rate to 5.25%.

This week’s meeting of the Bank of Canada Board of Directors scheduled for Moncton will now take place in Ottawa. As a result, a speech by Governor David Dodge scheduled for Moncton on September 19 will not take place.

The section of the speech dealing with current developments will be released on the Bank’s website at 13:00 ET on September 21.

The next regularly scheduled meeting of the Board, on Oct. 23, will be held in Moncton. The change in plans reflects uncertainty surrounding air travel arrangements, and will permit senior management of the Bank to work from its head office in Ottawa as world financial markets get back to full operations
this week.