In just over a week, Bank of Canada has changed their interest rate from 0.75% to 0.25%. This is the bank’s largest cut in rates since 2009 and its first in four years. More cuts are potentially on the way.
Since the Coronavirus outbreak, their interest rate has been lowered three times. The health panic has caused business activity to dwindle and ultimately resulted in some severe economic consequences.
Who is the Bank of Canada and what do they do?
The Bank of Canada is the nation’s central bank and a Crown corporation funded by the federal government. Essentially, their role is to “promote the economic and financial welfare of Canada.” They are responsible for monetary policies, financial systems, currency, and funds management.
What does this change mean for your money?
These changes will reduce interest paid on savings accounts, but it will also reduce interest rates on variable rate loans A.KA any loan that is prime+. Variable rates or “floating” rates change based on a reference rate which can be a negative or positive thing.