Tuesday, January 20, 2009

Big day

There was something significant that was supposed to happen today, but I'm having trouble remembering what it was. :)

Congratulations to our friends in the US on your new president. Whatever your political leaning, it's a fascinating time to be alive. The next four years should generate some great discussion, and hopefully a good deal of positive change in North America and the world at large.

Back on our side of the border, the Bank of Canada today cut its interest rate to 1.00%. In the fastest response I've seen to date, all five of the big Canadian banks immediately matched the rate drop, lowering their prime rates by 0.50% to 3.00%. This puts the banks 0.25% behind overall in terms of passing on the rate cuts to the customer. Not too shabby, when you consider that interest rate spread is a bank's bread and butter.

As always, interest rate news is good for some, and bad for others. Borrowers are finding that their cost of borrowing is reduced even further (my line of credit currently sits at 3.25%), but savers will no doubt also be hit with a drop in the APR on their savings accounts. Now might be a good time to lock in any mid-term savings in a GIC before the rates get any lower.

1 comment:

Jerry said...

It was a fascinating day here in the States, that's for sure. I was a bit put off by some of the media coverage, which seemed cheesy and didn't lead to anything of worth. However, I also hope that this change can give some insurance for positive growth in a time of great need throughout N. America and the world.