Lower policy rate expected to help speed along recovery by encouraging spending

Lower key policy rates are good for Moose Javians planning to take out a loan, according to a local financial planner.
On Tuesday, Mark Carney, Bank of Canada governor, agreed to keep the bank's key policy rate at 0.25 per cent, which is the lowest possible level.
Moose Jaw's Faye Carlson, Gold Key Investments certified financial planner, said the Bank of Canada announcement basically means banks can offer lower interest rate return loans to customers, while still making profits for themselves.
To the average Moose Javian, this won't make too much of a difference, she said, unless one needs a loan to buy a big-ticket item such as a car or a house.
However, in another sense, she said a low key policy rate does impact everyone, because its ultimate goal is to stimulate the economy.
According to Carlson, when the central bank sets its lending rate of return for loans to the country's various banks (key policy rate), the banks then set their own lending rates slightly higher than the rate at which they're repaying the central bank, so as to make a profit.
When the central bank's lending rate is low, that means banks can charge less interest for their loans.
Carlson said the aim of such measures is to encourage financial activity, because people borrow money to invest in things.
Speaking as a certified financial planner, Carlson said the lower key policy rates will probably not directly impact her business too much, except for the fact when people can spend less money on mortgage payments, that's more money those people can spend on other investments.

Carter Haydu can be reached at 691-1265.