BoC drops overnight rate to 0.50%

[Roy N.]

The Bank of Canada (BoC) announced Wednesday morning (2015.07.15) that they have lowered the overnight interest rate by 0.25% to 0.50%. The reasoning behind the move is the BoC has lowered its outlook for Canadian growth. and feels that additional monetary stimulus is required at this time to help return both the economy to full capacity and inflation to its target. 

The Loonie immediately gave up more than 0.01 $ against the USD.  

This is a bit of damper on the possibility of seeing real estate prices retrench.  The key will be whether the schedule 1 lenders lower their mortgage rates in the coming days as they did in response to the 0.25% reduction in January.  An equivalent move now, would see the prime lending rate drop to 2.6%

On the bright side, since all our mortgages are variable rate (prime - 0.3 - 0.5) we may be looking at some near 2% mortgages for a few months.