Canadian Economy Continues Slump

The Bank of Canada cut its key interest rate to 3.25 percent Thursday, the lowest since 1956, as the national jobless rate rose to 10 percent last month and housing starts slipped unexpectedly.

The central bank has been aggressively cutting rates to stimulate growth in a sluggish economy.

The bank rate, which had been 3.5 percent, fell for the 11th time this year. The rate is what Bank of Canada charges for lending to commercial banks.

Major banks responded, cutting the prime lending rate - the benchmark for other loans - to 4.75 percent effective Tuesday.

The cuts came shortly after the government reported an increase in the unemployment rate from the September level of 9.9 percent. The jump in the jobless rate came even though 42,000 jobs were created last month.

Meanwhile, the Canada Mortgage and Housing Corp. reported that housing starts in October were 9.8 percent below September levels.