Canadian financial institutions are lowering their prime lending rates to match the decrease announced by the Bank of Canada.
The central bank lowered its key interest rate by half a percentage point Wednesday to 3.75 per cent.
All of the Big Six banks including RBC, TD, BMO, Scotiabank, CIBC and National Bank say they have lowered their prime rate to 5.95 per cent, down from 6.45 per cent, as have Desjardins, Laurentian and EQ Bank.
It marks the fourth consecutive decrease this year after the Bank of Canada started pushing interest rates lower in June.
Bank prime rates help determine the cost of a range of loans including variable-rate mortgages and lines of credit.
The Bank of Canada's next scheduled interest rate decision is Dec. 11.
What people are saying about the Bank of Canada's rate decision
"High inflation and interest rates have been a heavy burden for Canadians. With inflation now back to target and interest rates continuing to come down, families, businesses and communities should feel some relief." — Tiff Macklem, Bank of Canada governor.
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"Activity in Canada’s housing market has been sluggish in many regions due to higher borrowing costs, but today’s more aggressive cut to lending rates could cause the tide to turn quickly. For those with variable rate mortgages – who will benefit from the rate drop immediately – or those with fast-approaching loan renewals, today’s announcement is welcome news indeed." — Phil Soper, president and CEO of Royal LePage.
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"This won't be the end of rate cuts. Even with the succession of policy cuts since June, rates are still way too high given the state of the economy. To bring rates into better balance, we have another 150 (basis points) in cuts pencilled in through 2025. So while the pace of cuts going forward is now highly uncertain, the direction for rates is firmly downwards." — James Orlando, director and senior economist at TD Bank.
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"The size of the December rate cut will depend on upcoming job and inflation data, but a 25 basis point cut remains our baseline." — Tu Nguyen, economist with assurance, tax and consultancy firm RSM Canada.
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"Today's outsized rate cut is mostly a response to the heavy-duty decline in headline inflation in the past few months. However, the underlying forecast and the Bank's mild tone suggest that the future default moves will be 25 bp steps, unless growth and/or inflation surprise again to the downside." — Douglas Porter, chief economist at Bank of Montreal.
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"The reduction won’t be the last one. The level of the overnight rate is still restrictive at 3.75 per cent and the BoC in the press release hinted at future rate cuts will follow to support a return to stronger GDP growth." — Claire Fan, an economist at Royal Bank of Canada.
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"The weak economic backdrop means we still see a strong case for the Bank of Canada to follow its larger 50bp cut today, which took the policy rate to 3.75 per cent, with another 50bp cut at the next meeting in December. We are in the minority, though, with markets pricing in less than a 10 per cent chance of that move." — Stephen Brown, deputy chief North America economist at Capital Economics.
