Markets Expect Nearly 85% Chance of Bank of Canada Rate Cut

Markets are expecting a near 85% chance of a rate cut by the Bank of Canada at its meeting on Wednesday. However, analysts believe there is a slightly higher likelihood that the Bank of Canada will leave rates unchanged.At its June 5 meeting, the Bank of Canada noted that four inflation indicators had taken a step toward its 2.0% target, but since then, they have stagnated. In addition, the rise in the unemployment rate is largely due to labor force growth outpacing hiring, rather than continued layoffs. Institutions expect that the Bank of Canada may be concerned about a weaker Canadian dollar exacerbating future inflationary pressures, and therefore may cautiously hold its line in July before resuming rate cuts in September.