Bank of Canada Cuts Interest Rate to Lowest Level Practically Possible

[Ally]

OTTAWA - The Bank of Canada has taken its influential target interest rate to the lowest practical level in an effort to combat what it says is deeper and more widespread global recession.

The central bank sliced the overnight rate in half to 0.25 per cent - the lowest it says is practical - and signalled strongly it will have to keep it there until at least mid-2010.

In addition, the bank has extended the term of its purchase and resale agreements it uses to inject liquidity into money markets from one-and-three months to six-and-12 months, while setting minimum and maximum bids that correspond to the historically low target rate.

The bank said it will target a daily level of settlement balance in the financial system at $3 billion, a move it says will help drive the overnight rate to the bottom of the trading band.

Read the full article here.

 

[mortgageman]

QUOTE (Ally @ Apr 21 2009, 09:33 AM) The central bank sliced the overnight rate in half to 0.25 per cent - the lowest it says is practical - and signalled strongly it will have to keep it there until at least mid-2010.
The key point in today`s announcement is not the actual rate cut but the indication by the Bank of Canada that they`re prepared to keep rates this low for a sustained period of time. That should make anyone with a variable rate mortgage or a HELOC very happy since you now have a measure of cost certainty for the next year on your monthly mortgage payment. Call your bank and tell them you want your payments reduced to reflect the lower interest rate if you are looking to boost your cash flow!

 

[navaz]

1/4 point is great-but if that makes a difference to purchasing a property! Are these rates here to stay is the more relevant issue

 

[Conrad5]

QUOTE (mortgageman @ Apr 21 2009, 09:36 AM) The key point in today`s announcement is not the actual rate cut but the indication by the Bank of Canada that they`re prepared to keep rates this low for a sustained period of time. That should make anyone with a variable rate mortgage or a HELOC very happy since you now have a measure of cost certainty for the next year on your monthly mortgage payment. Call your bank and tell them you want your payments reduced to reflect the lower interest rate if you are looking to boost your cash flow!

That brings another dimension to the market. Knowing that the central Bank is keeping the overnight rate at 0.25% for a year, how are the Banks going to price their 1 year fixed rates and how would that compared with a variable rate that can be locked in by that time next year?
Conrad.

 

[Dan_Eisenhauer]

I am going to wait for them to pay me to take their money.

The way things are going, that will be a few weeks from now as part of the Stimulus Package.

 

[greg12]

QUOTE (Dan_Eisenhauer @ Apr 21 2009, 12:19 PM) I am going to wait for them to pay me to take their money.

The way things are going, that will be a few weeks from now as part of the Stimulus Package.

This is looking like not such a bad idea. They are throwing absolutely everything at the economy.

QUOTE The central bank also said it will target a daily level of settlement balance in the financial system at $3 billion, a move it says will help drive the overnight rate to the bottom of the trading band.

 

[ChrisDavies]

It`s a great time to lower payments and use the difference to build up your reserve fund. I wrote a post on it: The 6 Things You Should Do When Interest Rates Drop