All the big banks have now followed the leader and cut their prime rate by 1/4%, to 4.50%.
As most readers now know, the Bank of Canada cut rates 1/2% today, hoping lenders would pass along the full savings to consumers. The last time the big banks deviated their prime rates from the Bank of Canada’s overnight target rate was 11 years ago in 1997. Today’s divergence is therefore probably a disappointment to the BoC. Although, they had to know it was a possibility given recent events.
As expected, when Canada’s banks made their prime rate announcements today, there was immediate public outcry. You can see some of it in the comments on this site.
Obviously, the banks knew the public would be upset, but apparently felt it was an unavoidable evil. These are unusual times and tight credit markets continue to dictate lending decisions. At least we can take solace that these times are indeed temporary.