Economists say BoC could cut interest rates again in July if inflation keeps cooling

OTTAWA — Economists are forecasting inflation slowed further in May, which would be welcome progress for the Bank of Canada after it cut its key lending rate for the first time in four years.

"It looks like it's a fairly uneventful calm month for inflation. I would say at this stage, less news is good news," said Douglas Porter, BMO's chief economist. Following the rate announcement, governor Tiff Macklem said the Bank of Canada had more confidence that inflation was moving closer to its two per cent target, citing various indicators that suggest price pressures have retreated.Looking ahead to the next interest rate announcement on July 24, TD director of economics James Orlando said the next two inflation reports could signal the way for another rate cut.

The Bank of Canada last week published a summary of its deliberations for its June 5 rate decision, which revealed discussion about waiting longer to lower interest rates before ultimately deciding to move on cuts. The Bank of Canada has been particularly encouraged by the recent slowdown in core measures of inflation, which gauge underlying price pressures and help the central bank track where inflation may be headed next.

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