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Major Banks Taking Profit
 January 5 2016     Posted by Siemens Group


Earlier this week the Bank of Canada announced it was reducing its' overnight rate by .25%. Sounds great doesn't it! Well, it really is not helping anyone aside from the major banks and their shareholder. Consumers are not getting the benefit from this unexpected change becuase the banks decided that they were leaving their prime rate unchanged. Typically the prime rate moves in tandem with the Bank of Canada overnight rate. In my career i have only seen the prime rate move outside of the Bank of Canada changes one other time, October 2008.

The banks are not completely offside. Margins have been very tight for a number of years, you cannot blame them in wanting to see a bit more profit on their lending instruments. Having said that, I'm sure that every consumer would like to see their cost of borrowing go down. I think eventually the banks may in fact reduce their rate, perhaps for spring mortgage sales.


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