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Banks lower prime rate

Canada's big banks lowered their prime lending rates Friday, the second time in a week, after Ottawa moved to address the banks' increased cost of borrowing.

Bank of Nova Scotia and the Bank of Montreal announced they will reduce their rates by one-quarter of a percentage point, or 25 basis points, to 4.25 per cent, effective Tuesday.

Toronto-Dominion Bank and Canadian Imperial Bank of Commerce said they would cut their prime rates by a slimmer 15 basis points, to 4.35 per cent.

“We are pleased to offer this reduction in interest rates to our customers, which we believe will reinforce confidence in the Canadian economy,” Chris Hodgson, executive vice-president and head of domestic personal banking at Scotiabank, said in a news release.

“At a challenging time in world financial markets, this reduction in interest rates reflects actions initiated by the Bank of Canada and the federal government.”

It was the second rate cut by the chartered banks in less than a week. The prime rate is the base rate that the banks use in pricing commercial loans to their best and most credit-worthy customers.