Monday, January 28, 2008

Did I call it, or what?

Behold the awesome foresight of Loonies And Sense! Four days ago, I predicted that other Canadian online savings accounts would follow HSBC's lead and lower their rates. As of today, ING Direct and ICICI Bank offer rates of 3.65% and 4.10%, respectively. That's a 0.10% drop for ING, and 0.15% for ICICI. Canadian Tire is still hanging in at 4%, but I don't know how long that will last.

OK, so it's not exactly rocket science to predict that banks will lower their savings account rates in response to a rate cut by the BOC, but it's interesting to see how the various institutions respond. Since November 2007, here is the trend in Canadian interest rates:
  • BOC down 0.50% from 4.50% to 4.00%

  • Bank prime down 0.50% from 6.25% to 5.75%

  • HSBC down 0.50% from 4.25% to 3.75%

  • ICICI down 0.40% from 4.50% to 4.10%

  • ING down 0.10% from 3.75% to 3.65%

  • Canadian Tire steady at 4.00%
Aside from HSBC, the online Canadian banks seem to be trying to avoid cutting rates as much as possible. I wonder how this will play out?

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