Is Prime as low as it will go?

[Darth Menace]

hey I know all we have are guesses, but what do you think will happen to the interest rates next? they have lowered them down .5% twice in the last little while. Am I on a pipe dream to think they may lower it again? I know these recent lowerings were to try to help the Canada/USA exchange rates, but from what I see that's not helping that much. Any guesses?

[jmc0]

They could do another .25%, but will likely just keep it the same.

[pitz]

I heard forecasters a few weeks ago predicting 1.5% fed funds, and 2% Bank of Canada overnight policy target rate. So if "prime" is usually taken as 175bp above the BoC target, then you'd be looking at 375bp.

Personally I don't think rate cuts are necessary, or even helpful on either side of the border. But until Stephen Harper or the US Senate agrees to appoint me to the BoC/Federal Reserve governor position.... :)

[PuppyB]

Pitz you deserve the position based on your tremendous financial knowledge.

I heard forecasters a few weeks ago predicting 1.5% fed funds, and 2% Bank of Canada overnight policy target rate. So if "prime" is usually taken as 175bp above the BoC target, then you'd be looking at 375bp.

Personally I don't think rate cuts are necessary, or even helpful on either side of the border. But until Stephen Harper or the US Senate agrees to appoint me to the BoC/Federal Reserve governor position.... :)

[Hubster]

Pitz for Governor!

Pitz for Governor!

Pitz for Governor!


He's in - any contenders??? Sorry Pitz, gonna need some blood work :)

And to attempt to answer the OP's question:
No I don't think Prime is as low as it can go. Most analysts are predicting an additional quarter point drop during their next meeting on June 10th. This "should" in turn bring the Prime lending rate at the banks down to 4.50%.

[pitz]

Pitz you deserve the position based on your tremendous financial knowledge.

Too bad the actual hiring requirements of the position aren't based on 'financial knowledge' (or even intelligence, for that matter).

[Icedawn]

Too bad the actual hiring requirements of the position aren't based on 'financial knowledge' (or even intelligence, for that matter).

But then you read Dodge's Academic credentials...


A native of Toronto, Mr. Dodge received a bachelor's degree (honours) in economics from Queen's University, and a PhD in economics from Princeton (1972).

During his academic career, he served as Assistant Professor of Economics at Queen's University; Associate Professor of Canadian Studies and International Economics at the School of Advanced International Studies, Johns Hopkins University; Senior Fellow in the Faculty of Commerce at the University of British Columbia; and Visiting Professor in the Department of Economics at Simon Fraser University. He also served as Director of the International Economics Program of the Institute for Research on Public Policy....

or Carney's business experience

Born in Fort Smith, Northwest Territories, Mr. Carney received a bachelor's degree in economics from Harvard University in 1988. He received a master's degree in economics in 1993, and a doctorate in economics in 1995, both from Oxford University.

Prior to joining the public service, Mr. Carney had a thirteen-year career with Goldman Sachs in its London, Tokyo, New York, and Toronto offices. His progressively senior positions included Co-Head of Sovereign Risk; Executive Director, Emerging Debt Capital Markets; and Managing Director, Investment Banking.

or Bernanke's academic history

He was educated at East Elementary, J.V. Martin Junior High, and Dillon High School, where he was a high-achieving pupil. He taught himself calculus, edited the school newspaper, was class valedictorian and achieved the highest SAT score in the state that year — 1590 out of 1600.[4] He was also the All-State saxophonist, playing in the school's marching band

He spent his undergraduate years at Harvard and graduated with a B.A. in economics in 1975. Throughout college, he worked as a waiter to support himself during the summer at South of the Border, a roadside attraction in his hometown of Dillon.[6] He received a PhD in economics from the Massachusetts Institute of Technology in 1979. His thesis was named "Long-term commitments, dynamic optimization, and the business cycle" and his thesis adviser was Stanley Fischer.[7] He taught at the Stanford Graduate School of Business from 1979 until 1985, was a visiting professor at New York University and went on to become a tenured professor at Princeton University in the Department of Economics. He chaired that department from 1996 until September 2002

and I have to say that while I may question some of their decisions, its really really hard, at least objectively, to challenge their intelligence/knowledge.