The U.S. Federal Reserve cut its key lending rate 1/2% today. The market expects the Fed to drop another 1/4% on December 16. That prompted the Financial Posts to write a piece today asking, “How low can they go?”
Many feel the Fed’s move today raises the odds that the Bank of Canada will chop rates 1/4% to 1/2% on our side of the border. The Bank of Canada’s next interest rate meeting is December 9.
Canada’s 5-year bond yield was near unchanged today, at 2.80%.
The “prime – bankers’ acceptance spread” (a rough proxy for variable-rate mortgage margins) narrowed today to 1.37. The 10-year average is 1.68.
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Last modified: April 29, 2014
It amazes me how little the central banks seem to understand about economics. The credit crunch is a supply side problem. The low interest rates (price of money) is restricting supply of money available to be lent out. The lower they cut interest rates the worse they make it.
Yet great for Joe average with a VRM. I’ll gladly take the drop in rates and continue to live within my means.
interest rates are not one tenth the problem in the credit crunch as transparency is.