Bank of Canada cuts interest rate

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Money just got a lot cheaper.  In a surprise move this morning, Canada’s Central Bank decided to cut its key lending rate a quarter of a point.  That means it’s now under one percent for the first time since early 2010.  The Bank of Canada shocked markets today by cutting its key interest rate, citing the looming threat of falling oil prices.

The cut should result in lower interest rates for variable rate mortgages, lines of credit and other loans that float with prime rates. Bank of Canada Governor Stephen Poloz says the plunging oil prices will reduce income flowing into the country and could increase unemployment.

Consumers can also expect mortgage rates to dip slightly in response to the bank’s interest rate cut. CIBC’s chief economist is predicting a quarter of a percentage point drop in variable or floating mortgage rates. TD Bank economist Craig Alexander says lower rates could spur consumers in non-oil dependent provinces like Ontario to take on more debt, which could boost the region’s real estate market.