All else being equal, this would have increased the financing costs for our businesses and households. However, all else is not equal. The stronger financial position of Canadian banks means that they now borrow at rates considerably lower than those of many of their international peers. In addition, the Bank of Canada has eased its overnight rate substantially since the onset of the crisis.
As a result, the effective borrowing costs faced by banks, businesses and households are estimated to have fallen over the past year. This decline contrasts with the experience of most other developed countries. 7 In its upcoming Monetary Policy Report and in light of recent events, the Bank will revisit its current assumption that borrowing spreads will begin to narrow in 2009.