Interest Rates Dropping again

According to globeandmail.com, Bank of Canada is preparing to decrease its key interest rate this week in order to provide stimulus to the economy. With unemployment on the rise and inflation quickly diminishing, economists widely expect the Bank of Canada to cut its key rate by half a percentage point tomorrow. Market analysts will then pore over the central bank's new economic outlook, to be released Thursday, for clues about whether the B of C will take rates even lower, perhaps even to zero.

Note: An adjustment to the Bank of Canada key interest rate will affect variable /adjustable rate mortgage products which are tied to this rate.* Fixed rate mortgages are not immediately impacted by adjustments to the B of C rate as mortgages of this type are tied to bond rates.

*Although many Canadian financial institutions base their own individual rate of prime on the B of C rate, it has become common over the past few months for most to delay passing on rate reductions to their customers.