Interesting article about BoC rate and Prime rate, posted in
Financial Post
Quote:
|
The “whole point [of the cut from 1% to 0.75%] was for the banks to follow suit [and] stimulate spending. If they don’t, then the Bank cut the rate for nothing,” a former Finance official who now advises banks told the Financial Post.
|
Further into the article it mentions that if banks don't cut Prime, BoC may be forced to lower BoC rate again to get the banks to cut Prime
Quote:
If banks don’t come to the conclusion that they need to cut their lending rates, observers say the Bank of Canada may act again and slash overnight interest rates further.
“I think what you might see, if the banks don’t pass on this cut, is the Bank of Canada will just lower rates again in the spring to force them to do it,” said one banking source.
That view was backed up by research published Friday by Bank of America Merrill Lynch, which noted that the prime lending rate at banks typically moves “in lockstep” with Bank of Canada adjustments.
“In our view, if banks fail to lower the prime rate, [Bank of Canada Governor Stephen] Poloz may be tempted to respond with another dose of policy easing,” economist Emanuella Enenajor wrote in the report
|
It seems as though it is still a wait and see on whether someone lowers Prime before the next BoC meeting. The next 3 meeting dates are:
4 March
15 April* Monetary Policy Report published
27 May