This morning, the Bank of Canada announced yet another rate cut, taking the overnight rate target down from 4.0% to 3.5%. This marks a departure from the conservative 0.25% cuts we've been seeing over the past few months. Assuming that the banks follow this move, this will take the prime rate down from 5.75% to 5.25%.
As with any rate cut, this is good news for borrowers, and bad news for savers. If you have revolving debt, then you will be paying less interest on it ($5 less per year on a $1,000 debt). However, you will also earn less interest on cash savings, since the online banks also lower their savings account rates when the BoC cuts its rate.
Here's a quick review of the BoC and bank prime rates over the past year: