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Surprise 1/2% Rate Cut by BoC

Falling-Interest-Rates_2 The Bank of Canada (BoC) joined other world bankers in cutting their key lending rate 1/2% today.  It was the first such unscheduled move since just after 9/11’s terrorist attacks.

The BoC was widely expected to cut rates at its next Oct. 21 meeting, but couldn’t wait.

Now people are watching to see if/when the big banks will follow the BoC’s lead and make cuts to their own prime rates.  Prime rate, as most readers know, affects variable-rate mortgages in Canada.

Scotiabank economist Derek Holt said, ““This is not the last of the cuts, and both the Fed and the Bank of Canada could easily cut another 100 basis points.”

The 5-year bond yield is currently down 0.02% to 2.75%.  30-day bankers acceptance yields are down 0.02% to 3.58%.

More to follow…