As predicted, the Bank of Canada lowered their overnight rate to 0.5% on March 3rd, which brings prime rate down to 2.50% from 3.00%. Based on a recent article from TD Bank, one of the main reasons for the cut was due to tight credit. A proposed framework for easing future credit is expected to be released in April. However, a new policy alone will not be the only solution. The report indicates that external factors affecting Canada, such as the US recession (in particular, mention of the auto and housing industry) will plague us and until there is a form of “stabilization of global financial markets around the world” we will take time to recover.
On the rate front: a further 25bps decrease making the overnight rate 0.25% is anticipated (prime rate = 2.25%) and these rates wouldn’t be expected to rise again until the latter half of 2010.
This Canada prime rate update is from: The Calgary Real Estate Blog
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