Some of Canada’s big banks reacted to the Bank of Canada’s (BoC) 0.25% interest rate cut by dropping their Prime rates to 4.00% and this represented a cut of 0.25%-0.35% from their previous Prime rates. TD Canada Trust, Scotiabank, Bank of Montreal (BMO), CIBC, all moved to 4.00% which takes effect today, October 22, 2008, while the National Bank of Canada and RBC have kept their Prime Rates at 4.25% as of this morning.
TD stated that its “decision to lower its Prime by 35 basis points reflects today’s Bank of Canada rate change, as well as the decrease in our cost of funds due to government actions and market forces, allowing us to pass the benefits on to customers”.
The fact that the banks matched or exceeded the BoC’s rate cut is very good news as it implies that things may somewhat be returning to normal. The big banks failed to match the BoC’s 0.50% rate cut a few weeks back as their own costs of funds weren’t decreased due to the lack of interbank lending in the markets, and so couldn’t pass the savings onto customers.
The best variable rate we had on the site was 4.50% yesterday, so we’ll see if that changes today.
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