Prime Rate To Remain Unchanged

The "experts" were wrong, interest rate is not coming down. The Bank of Canada surprised the markets on Tuesday by holding its key interest rate steady at 3 percent and signaling an end to its rate-cutting cycle. The central bank announced today it is putting an end to its aggressive streak of rate cuts, even though it acknowledged the economy has stagnated and could well weaken further. The threat of higher inflation is greater than the weakening economy.

Economists and market players had widely been expecting a rate cut of a quarter of a percentage point to stimulate the economy. Homeowners with variable rate mortgages were expecting a lower monthly payment as the prime rate was expected to drop. But it didn't happen.

The Bank of Canada has cut rates by a total of 150 basis points since late last year, attempting to stimulate the economy.

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