The Bank of Canada slashed its key short-term interest rate almost as low as it can go yesterday and said it may need to resort to extraordinary measures to rescue the economy from a recession.
The central bank cut the overnight rate half a percentage point to an all-time low of 0.5 per cent.
Canada’s commercial banks quickly followed suit, cutting their prime rates to 2.5 per cent, effective today.
The drop will benefit some mortgage holders but will have little or no immediate impact on many corporate borrowers or credit card holders and will reduce some interest rates paid to savers.
While variable mortgage rates tied to prime are being reduced, longer-term and fixed rates have not kept pace with the central bank’s moves.
