Globe Says Banks May Not Match Rate Cut

The Globe suggests banks may disappoint variable-rate mortgage holders for the time being.  Economist Paul-Andre Pinsonnault says:

“Going into the Bank of Canada rate decision, the spread between the prime rate and 30-day BAs was only at 141 basis points (vs. 164 basis points  historically). Consequently an automatic reduction in the prime lending rate of commercial banks (which would drop the spread to 116 basis points) is not a sure thing unless funding costs also come down.”

The Globe says bank bosses are not just fixated on what the Bank of Canada does.  They may want to see inter-bank lending rates drop before cutting prime rate further.

We’ll keep watch and report any major moves that we see…