Yesterday, The Canadian Press reported that The Bank of Canada lowered its short-term interest rates to 0.5%. This is the lowest that it has ever been. In an effort to join the central banks move to assist with the national economic slump, Canadas commercial banks have also lowered their prime rates by half a percentage point to 2.5%.
Scotiabank CEO Rick Waugh referred to the interest rate drop as “a step forward” for the economy, but kept in mind that the restoration of the worlds financial system remains the top priority.
According to reports in Sun Media Publications throughout the country today, the lowered prime rates now being issued by the banks may benefit some mortgage holders but will not likely have an instant impact on corporate borrowers or credit card holders.
Finance Minister Jim Flaherty has indicated that it is improbable that further cuts can be made but insists that the current interest rate slash should help to ignite resurgence in economic action.
“You have to have confidence,” Flaherty advises consumers, “This too will pass. We will come out of this and there will be opportunities as we do so.”
Unfortunately, the current state of the nations economy paints a dreary picture.
Canadian car and truck sales have dipped 27.7% last month from a year ago according to auto analyst, Dennis DesRosiers. As well, United States Steel Corp. recently announced that it is shutting down its Hamilton mill and closing most of its Lake Erie operations temporarily. Sadly, this has impacted the jobs of approximately 1,500 employees.
Flaherty, however, insists that the current job losses are not nearly as excessive as those that took place in the recession periods of the early 1980s and 1990s, and certainly not as extreme as the job losses that occurred during the Depression of the 1930s.
Only time will tell what type of effect the interest rate cuts will have on Canadas current financial hardship.