January 22, 2015 9:46 am
Updated: January 22, 2015 9:15 pm

Are more interest rate cuts on the way from Bank of Canada?

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WATCH: Eric Sorensen explains why banks may not lower their interest rates according to the Bank of Canada.

Less than 24 hours after the Bank of Canada stunned economy experts with a sudden cut to its key interest rate, speculation is already moving toward whether or not another credit-juicing rate cut is on the horizon.

Some say yes, and soon – like March soon, when the bank is next scheduled to make a rate announcement.

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“We are penciling in another rate cut next meeting,” Michael Gregory, an economist at the Bank of Montreal said Thursday morning.

Canada’s central bank is responsible for influencing interest rates charged by private banks and lenders, as well as managing other high-level monetary matters to keep the financial system and broader economy stable.

The Bank of Canada said Wednesday it was taking out “insurance” against the economy slipping into lower growth (or worse, recession and or deflation) because of fast-falling oil prices by cutting its trend-setting rate. It’s a move that will entice more borrowing and spur economic activity.

But BMO’s Gregory said the way the economy is going, by his estimate another rate cut is likely warranted, calling for the bank to cut its key interest rate again at the next scheduled announcement, slated for March 4.

“The case for a second insurance move would seem to be supported by oil prices merely moving sideways let alone falling further,” the BMO economist said. Extremely low oil prices could mean another cut of a quarter of a percentage point, or 25 basis points, to a rock-bottom interest rate of just 0.50 per cent.

Calls for restraint

That will make borrowing even more attractive than it is now, and saving more difficult as interest charged to borrowers or paid to savers edges even lower.

MORE: Canadians pile on more debt as U.S. households pay it down

With personal debt levels perched at all-time highs, personal finance experts were busy Wednesday urging Canadians not to borrow more money, even at lower rates. And it looks like they’ll be issuing those same warnings for some time to come.

“I’d strongly caution consumers, the Bank of Canada is telling us something; the economy is slowing down,” said Dave Nugent, portfolio manager for Wealthsimple, an investment management company in Toronto.

“This is a time to take advantage of paying down debt at a cheaper rate,” Nugent said. “This is not a time to gorge on more.”

jamie.sturgeon@globalnews.ca

WATCH: Alan Carter looks into the plunging dollar, low oil prices and how lower interest rates will affect you.

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