The following is a Financial Post article on Candaian interest rates as presented by a panel of economists:
A panel of nearly a dozen non-government economists Thursday urged the Bank of Canada not to go ahead with an expected further interest-rate cut Tuesday, with some members voting for a rate hike instead.
Should the central bank follow that advice, it would rob Canadians with floating rate mortgages and other loans of hope for any interest rate relief until midsummer at least.
The C.D. Howe Institute's Monetary Policy Council voted to recommend the central bank leave its trend-setting target rate for overnight loans at three per cent, with five of the 11 economists voting for no change, three voting for a quarter-point cut, and three, all of them academics, voting for an increase -- one for a quarter-point hike and two for a half-point spike.
The commercial banks have so far matched any cut in the central bank's key rate with cuts in their prime rates, to which floating-rate loans are tied. But they have recently taken nearly a full business day to respond, indicating that the passing on of central bank rate relief to their customers is no longer a given.
The reason given for those delays has been that with the eruption last year of a domestic credit crunch, the commercial banks' borrowing costs in the bond market have not eased.
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