The Bank of Canada cut a key interest rate by three-quarters of a percentage point on Tuesday, leaving it at the lowest level in 50 years.

This latest interest rate reduction, the biggest drop since one of a similar size in October 2001, lowered the bank's overnight rate to 1.5 percent, a level not seen since 1958.

The bank said it means to combat economic weakness, which has been deepening since October.

"While Canada's economy evolved largely as expected during the summer and early autumn, it is now entering a recession as a result of the weakness in global economic activity," the bank said.

"The recent declines in terms of trade, real income growth, and confidence are prompting more cautious behavior by households and businesses."

In the wake of the Bank of Canada's decision, the Canadian dollar was trading down 0.93 of a cent to 78.81 US cents.

(Xinhua News Agency December 10, 2008)