Banks' rebellion means tighter crunch on Main St.

TARA PERKINS AND HEATHER SCOFFIELD From Thursday's Globe and Mail TORONTO and OTTAWA — For the first time in more than a decade, Canada's Big Five banks are refusing to pass along the full extent of a central bank interest-rate cut, saying they're already feeling too much pain from a steep jump in their own borrowing costs as a result of the financial crisis. Each of the major banks announced a reduction of just a quarter of a percentage point in their prime lending rate Wednesday, after the Bank of Canada lowered its key rate by twice as much, or a half-point, to 2.5 per cent. Although not required to move in step with the central bank, the banks have rebelled only once, in the Asian financial crisis of 1997, since Canada moved to its current regime of rate changes in 1996. Their half measure Wednesday means the central bank... [read full story]