this is a great example of how clueless the media is.

rate cuts have to be really big to affect the economy. if you want to buy a house, are you going to change your mind because the interest rate is a quarter of a percent lower? if it even *is*? there's no guarantee that the central bank changing it's inter-bank lending rate will have any effect on interest rates that you or i have to deal with. that's still an external market. and, if you weren't thinking about buying a house, is a quarter of a percent going to make you jump at it?

a three-five percent change might make you change your mind. a 0.25% change? it's like it didn't even happen, right.

the bank knows that. the government knows that. economists know that. it's only the media that doesn't know this.

so, why do this?

the answer is that the government is about to create a lot of debt through stimulus spending. that's actually not bad, either, because the economy is dead - although see my recent repost on keynes for some healthy skepticism. but, if you're going to create a lot of debt, it is optimal to do so in an environment with minimal interest rates - because then you're paying less interest on the debt.

the article says nothing about this. you won't find one that does. it says something about not needing to cut rates because of the stimulus spending. which is total fucking derp derp derp.....

http://www.cbc.ca/news/business/bank-of-canada-rate-advancer-1.3408694