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Lowest Interest Rates Ever – Bank of Canada – Vancouver real estate

March 3, 2009

Filed under: Mortgage Financing,Real Estate Market,Vancouver — Richard Morrison @ 12:53 pm
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The Globe & Mail, March 3rd, 2009
The Bank of Canada cut its benchmark lending rate to within spitting distance of zero, and signalled that it is prepared to increase the money supply to spark a rebound that policy makers acknowledged could be farther off than they first thought.

As most economists expected, the central bank cut its overnight lending rate by half a percentage point to 0.5 per cent, the lowest ever, prompting the country’s biggest lenders to quickly match, dropping their prime rates to 2.5 per cent.

The surprise in Tuesday’s statement was the declaration that Governor Mark Carney and his advisers on the governing council are preparing the ground for a program of “credit and quantitative easing.”

Such an effort would pump money into Canada’s financial system by giving banks and others a new buyer for assets such as government bonds and corporate debt. The Bank of Canada’s current credit-market programsare different because they only offer short-term loans, taking banks’ paper assets as collateral.

The Bank of Japan already is buying company debt, and the U.S. Federal Reserve and the Bank of England are considering similar plans because some markets for credit remain unusually tight more than a year into the financial crisis.

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