WATCH: Eric Sorensen explains why the Bank of Canada made the surprise interest rate cut and why it matters to you.
The Bank of Canada stunned economy experts and financial markets on Wednesday by cutting its benchmark overnight interest rate by one-quarter of a percentage point, to 0.75 per cent.
That might not sound like much, but the surprise move is the wrong direction financial experts want rates headed in as consumers confront record debt loads. A fresh cut to interest rates will encourage more borrowing.
The immediate risks for the national economy presented by plunging oil prices however outweigh consumer debt considerations, according to the bank.
“This decision is in response to the recent sharp drop in oil prices, which will be negative for growth and underlying inflation in Canada,” it said in a statement.
Canada’s central bank is responsible for influencing interest rates charged by private banks and lenders, as well as…
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