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Interest rate cut coming to Canada

Canadian interest rates could be coming down sooner than previously expected, experts said yesterday following Bank of Canada governor David Dodge's suggestion that a change to monetary policy could come next month. Dodge hinted the Bank of Canada may cut interest rates while he was in South Africa for a meeting of the Bank for International Settlements, saying global financial turbulence will be prolonged and poses a risk that central bankers must take into account. He added that the Canadian dollar has moved outside any normal ranges that it had been in, and these are really going to contribute to additional pressures. The Canadian economy, in particular manufacturing, forestry and tourism has been pinched severely in recent months by the dollar's sharp rise. A .25% cut may not be enough to bring the value of Loonie down but it will certainly be a boost for already strong housing market. The bank may have to cut rates even further to see some results in the currency markets. Borrowers will have to wait until at least next month before they start seeing some interest rate relief, but savers are already being nicked by rate cuts, as at least one major Canadian bank on Friday reduced the rates it pays on all of its guaranteed investment savings certificates by as much as one-quarter of a percentage point.

The bank makes its next scheduled announcement on interest rates Dec. 4.

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