Interest Rate Cut Again. Will Prime Rate Come Down?

The Bank of Canada cut its key interest rate again today (October 21st) by a quarter of a percentage point, attempting to give the Canadian economy a boost. Today's cut follows an unscheduled half-point reduction on Oct. 8 in co-operation with other major central banks. The bank hinted that it may cut further at the next scheduled announcement on December 8. Bank of Canada's benchmark rate now stands at 2.25 per cent down from 2.50.

Will the prime rate come down?

The big banks only passed on half of the 50 basis point central bank cut two weeks ago, moving another 25 basis points only after CMHC purchased $25-billion worth of mortgages. Experts are saying the big banks will once again break ranks with the Bank of Canada and not match Today's cut in benchmark interest rates.

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