OTTAWA - The Bank of Canada says the recession is far worse than it previously thought and has slashed its overnight interest rate to the lowest practical point, to 0.25 per cent.
The central bank says it will likely have to keep the trend-setting rate at that floor until mid-2010 in order to try to lift the economy out of its slump.
The bank's decision was not unexpected, but the considerably darker view of the economic situation it presented along with Tuesday's bank rate cut was a surprise.
The central bank now says the economy will shrink by a massive three per cent this year, almost three times as much as the 1.2 per cent it forecast as early as last January.
And it says the economy won't rebound nearly as strongly as it thought, saying any recovery won't start until the fourth quarter and growth next year will be more muted, at 2.5 per cent instead of the 3.8 per cent previously expected.
BMO just announced it is dropping its prime rate 1/4%, in line with the Bank of Canada.
BMO was the first big bank to move today. Their statement was issued at 9:01am ET, just one minute after the Bank of Canada’s announcement.
The rest of the five major banks are expected to follow.
BMO said that it’s closed variable-rate mortgage will now be priced at 3.05% (prime + 0.80%).
Please feel free to contact
Newmark Mortgages and Financial Services
1 comment:
Little but Interesting One!
Home Advice
Post a Comment