TORONTO (Reuters) - A decision by Canada's biggest banks to pass along all of this week's central bank interest rate cut to customers suggests its credit markets have begun to thaw even as lending in many countries remains in a deep freeze.
Within minutes of the Bank of Canada cutting its benchmark rate on Tuesday by a half percentage point to 1.00 percent, Canadian banks lowered the rates they offer to their best clients by an equal amount.
Canadian banks, which have remained profitable even as the global financial crisis has ravaged their foreign peers, were criticized in the last quarter of 2008 when they twice decided not to pass along the full rate cuts made by the Bank of Canada, a decision they justified on the grounds of tight credit markets.
That was then; this is now. The fresh willingness of banks to follow the leader in easing borrowing conditions could mark the beginning of the end of a crisis that has threatened to stifle the Canadian economy for months or even years to come.
"The fact that we saw the match from the banks with the Bank of Canada rate is probably consistent with the view that there has been a slight improvement in tone with the markets," said Craig Wright, chief economist at Royal Bank of Canada.
Click here to read the remainder of this article.
Posts
