Canada finds itself in a 'credit deadlock'

In the face of an "intensifying" financial crisis, the Bank of Canada cut its benchmark lending rate Tuesday by another 50 basis points, to a record low 1%, on the belief the domestic economy will contract 1.2% this year and experience two quarters in which inflation dips below zero.

The bearish outlook is in stark contrast to the central bank's previous projection, of 0.6% economic growth this year, issued last October. There was also no indication that total inflation, which includes...

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