Fed Cuts Rates 1/2%

US-Federal-ReserveThe 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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