INTEREST RATES DROP AGAIN

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Hello, the bank has followed the Bank of Canada rate cut with a cut to the bank prime rate by 50 points to 4.75%. I look forward to hearing from you with any questions or clients who need great service with mortgage financing, thank you.

Bank of Canada Cut Overnight Rate by 50bps, with Further Cuts "Likely to Be Required"
Bank of Canada cut rates by 50bps, bringing overnight rate down to 3.00%

Forward-looking language was a little softer than in March, but still points to further rate cuts, as the Bank said that "some further monetary stimulus will likely be required to achieve the inflation target over the medium term"

Overall tone of the statement was pretty dovish, as the Bank is worried about "a deeper and more protracted slowdown in the U.S. economy" as well as "tightening credit conditions and softening sentiment," which led the Bank to revise downward its 2008 and 2009 GDP forecasts for Canada.

As was widely expected, the Bank of Canada cut the overnight rate by 50bps today, bringing it down to 3.00%. But, the issue was not what the Bank did, but what it said, and on that front the statement was more or less in line with what we had expected. Most importantly, the Bank did signal the probability of further rate cuts, saying that "some further monetary stimulus will likely be required to achieve the inflation target over the medium term." And in true central bank form, the Bank added that "the timing of any further monetary stimulus will depend on the evolution of the global economy and domestic demand, and their impact on inflation in Canada."

Source: Lee Politano, Manager Residential Mortages TD Canada Trust

To visit Lee: http://www.tdcanadatrust.ca/msf/leepolitano/

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