Expectations that the bank will lower its overnight lending rate when it makes its scheduled announcement Wednesday have been high since last week's release of the latest Statistics Canada inflation report, which showed annual inflation cooled to 2.7 per cent in June.
"So it always made sense that the Bank of Canada was likely going to do at least two rate cuts in a row before pausing. And now recent data has reinforced that view." While inflation remains higher than the Bank of Canada's two per cent target, Mendes said he believes delaying any longer could have negative repercussions.
The latest Statistics Canada report on retail sales Friday showed Canadians reined in their spending in May as retail sales dropped 0.8 per cent to $66.1 billion."What the Bank of Canada is trying to do is just reduce the amount of restraint it is placing on the economy.
But while most market watchers believe an interest rate cut will come this week and be followed by additional cuts later in the year, that view is not unanimous.
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