Enthusiasm on the wane

Regularly scheduled Bank of Canada interest rate decision announcements are always made at 9 am. The press releases from the big banks, announcing their intention to pass the change onto their customers through the prime rate, usually follow fairly quickly thereafter. Until recently. Below, the time stamp of press releases from TD Bank Financial (usually the first off the blocks) announcing a matching move in its prime rate:

July, 2007 – increase – 10:55 am

November, 2007 – 25 bp decrease – 11:37 am

January, 2008 – 25 bp decrease – 12:09 pm

March 4, 2008 – 50 bp decrease – 2:19 pm

April 22, 2008 – 50 bp decrease – 4:52 pm.

A decision by banks not to change their prime rate would, of course, dampen some of the stimulative effect the rate cut might have on the economy. (It would do some nice things for bank profits, however.) The banks mused about not following the Bank of Canada in January, but so far have continued to take its lead — with, it seems, more hesitancy each time.