Wednesday

Canada Cuts Interest Rates - Prime @4.75%

The Bank of Canada cut its interest rate by half a point to 3% whilst noting that further cuts might be necessary. The slowdown in the United States, which is Canada's largest trading partner, has begun to affect the Canadian economy. The cut reduces the bank's overnight rate — what big banks charge each other for overnight loans — to three per cent. The overnight rate hasn't been that low since December 2005. It was second time in as many months that new bank governor Mark Carney has moved aggressively on interest rates, bringing down the key overnight rate to three per cent, one-and-a-half points below where it was at the start of December. But in an unusual reaction, Canada’s chartered banks delayed for most of the day matching the central bank’s reduction, suggesting growing unease with the state of financial markets. The Toronto-Dominion Bank was first to act, after 6 p.m. AT, announcing a 50 basis rate cut to its prime lending rate to 4.75 per cent, followed by the other four big Canadian banks.

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