Wednesday

Bank of Canada slices lending rate to 3.5 per cent

The Bank of Canada has cut its key overnight rate by half a percentage point to 3.5 per cent from four per cent. The last announcement on the rate came on Jan. 22 when the central bank cut the rate by a quarter-point, or 25 basis points. Around the world, the Bank of Canada sounded a gloomy warning on the U.S. economy by slashing its key rate by a half point, its biggest cut since 2001, and signaling more to come. The Bank of Canada reduced its overnight lending rate to 3.50 percent, bringing Canada's cumulative rate cuts since December to one percentage point and narrowing the gap with the U.S. Federal Reserve rate of 3 percent.

What does it mean for people with mortgage payment? Most banks are expected to drop their prime lending rates to 5.25%. The difference in the drop of half a point over let's say in a $100,000 mortgage, is about approximately $40 a month in interest saved — over the long term, several thousand dollars.

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