Daily Financial Update

U.S. cuts rates again in effort to quell crisis
Gives the Bank of Canada more room to make further cuts in its overnight target rate also

· TSX recovered some of Mondays losses +184.56
· Dow +420.41 faring far better than TSX
· Dollar +.61c to $100.68US
· Oil +$3.74 to $109.42US per barrel
· Gold +1.80 continuing upward to close at $1003.20
· Bond Rates: http://www.bankofcanada.ca/en/rates/bonds.html

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March 19, 2008
Martin CrutsingerThe Associated PressWASHINGTON
The U.S. Federal Reserve slashed a key interest rate by three-fourths of a percentage point yesterday, moving aggressively to contain a credit crisis threatening to push the United States into a severe recession.
The latest action brought the federal funds rate -- the interest that banks charge each other -- down to 2.25 per cent, the lowest point since late 2004.
It marked the second cut of three-fourths of a percentage point this year.
The first occurred at an emergency meeting on Jan. 22 and was followed by a half-point cut at a regular meeting on Jan. 30.
The U.S. move gives the Bank of Canada more room to make further cuts in its overnight target rate, which currently stands at 3.75 per cent.
Many observers expect a half-point cut in Canadian short-term rates on April 22 and two more quarter-point cuts later in the year.
That would reduce Canadian borrowing costs by a full percentage point, in addition to previous reductions of a quarter-point in January and half a point on March 4.
After yesterday's cut, Fed chair Ben Bernanke and his colleagues have now cut the funds rate six times since last September, with the reductions becoming more aggressive since January as the central bank has faced growing turmoil in global financial markets.
In explaining its actions, the Fed said that it was having to navigate a difficult policy environment that included sluggish economic activity and rising inflation pressures.
The Fed statement said that "the outlook for economic activity has weakened further'' but that "inflation has been elevated'' with some signs that expectations of future inflation pressures are rising.
But the Fed signalled that it stood ready to cut rates further if necessary, saying that "downside risks to growth remain.''
Bernanke and other Fed officials have said in recent comments that they view the threat of economic weakness as a bigger risk at the moment than inflation given the risks to financial markets.
"Financial markets remain under considerable stress and the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters,'' the Federal Reserve Board said in its written statement.
In Jacksonville, Fla., yesterday, U.S. President George W. Bush said the government will take further action to help the sagging economy.