Two weeks ago, the Bank of Canada continued with its rate tightening policy, bringing the overnight lending rate up to 1.75%; a level last seen in the middle of the Global Financial Crisis. Most of Canada’s largest banks reacted that same day, bringing the Prime Rate to 3.95%. Market sentiment is that Canada’s central bank will continue to tighten its lending policy going into 2019 and 2020.
The Central Deposit Program (“CDP”) was launched under the BC Liberal Government in February 2013. The claim was it was to reduce borrowing costs for government organizations by allowing them to invest their excess cash back with the government, instead of a private sector bank. The CDP claims to use this excess liquidity from these organizations to offset Provincial cash requirements and therefore reduce debt and debt related services.
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