Question

Discuss the potential benefits of lowering Canada's interest rate to stimulate domestic economic growth.

Answer 1

Theoretically, when you reduce the interest rate, local companies will have easier time to borrow money to increase and improve their productivity. With lower interest rate, consumer will also find it unattractive to keep their money at the bank. They will instead, spend their money on local products and services or invest in local companies' stocks.

Answer 2

they just changed their corporate tax regs, their main exports are on the fritz (oil/gold price fallouts), and the there's been a fair decline in M&A activity into Canada... also, when you factor in regressive growth issues and declining inflation concerns, you've got a pretty good argument for the Canadian central bank to start easing interest rates.... . as they ease interest rates that will stimulate economic activity and would be one way for the country to avoid getting hit really hard by the backlash of decreased exports