Canadian Prime Rate Update

In Canada and the United States, the Canadian prime rate update is by definition an interest rate used by banks. The term originated as a rate of interest for favoured customers who had good credit with their banks.

Today, the prime rate is used in calculating some variable rate loans. This can often include secured lines of credit like home equity loans, and most credit card rates are also based off of the prime rate. Variable interest rates may be listed as above or below prime rate. Prime rates do not change often, only when banks need to alter lending rates. The prime rate is typically the same from bank to bank, however it can vary slightly. Banks usually adjust prime at the same time.

The prime rate is also a factor when determining the state of the economy. With the following Canadian prime rate update, it shows a possible upturn in Canada’s economic crisis which can have implications to other countries throughout the world as they face tough economies and recessions as well.

According to the Bank of Canada, in the second half of this year, the Canadian economy may grow faster than what was forecast this past summer. In their projections, they stated that the economy would rebound by 1.3 percent in the third quarter followed by 3 percent in the final quarter. They believe that this signals a change in the economy where it is performing at a better level than it was a mere two months ago. They also believe that this activity may signal the end of the recession.

Through improved financial conditions, firm commodity pricing and policies that stimulated both monetarily and fiscally along with an increase of business and consumer confidence, domestic demand growth is being supported. The Canadian prime rate update has also assisted in the growth experienced.

With sound fiscal management, Canada’s economic upturn will contribute to its growth. In the past decade, a legacy of prudent management can continue its progress.

Similar to the growth in the United State’s economy, the car industry has been a factor. Inventory adjustments and automotive production suggests that the GDP (Gross Domestic Product) growth for the second half of 2009 has the possibility of being stronger than what the Bank of Canada has previously projected.

With the release of their latest rate policy announcement, the Bank of Canada kept its key overnight interest rate at an unchanged .25 percent. They stated that they were committed to keep this rate at this current level until mid-year 2010 as long as inflation is still in check.

In addition to the Canadian prime rate update, the bank also cautioned about the high Canadian dollar. They indicated that the persistent strength of the Canadian dollar is a risk to economic growth and can signal a return of inflation. In spite of this warning, the bank predicts that inflation will remain low in the foreseeable future. Economists believe that these statements indicate an optimistic view of the emergence from recession for Canada.