September 'very much on the table': What economists say about Bank of Canada rate cuts

financialpost.com:

Stephen Brown, deputy chief North America economist with Capital Economics, said the Bank of Canada’s comments suggested it would keep cutting rates if inflation continues to ease.

“Our forecast for inflation this quarter is the same as the bank’s, leaving us to judge that another interest rate cut in September is the most likely outcome,” Brown wrote in a note.

The economist added that the announcement came as “no surprise” as the market had put the chances of a rate cut at 90 per cent.

While the Bank of Canada’s interest rate cut was also of little surprise to Avery Shenfeld, managing director and chief economist of CIBC Capital Markets, the central bank’s statement has him adjusting projections for September and the rest of 2024.

Shenfeld had previously predicted a hold in September before another cut in December, but now expects a September cut.

“This is clearly now a dovish central bank that is looking to ease up on rates and get the economy moving again, so a further 50 (basis points) of easing this year, and our projection for a 2.75 per cent rate at the end of 2025, seem fully consistent with that stance,” he wrote in a note.

Royce Mendes, managing director and head of macro strategy at Desjardins Capital Markets, said today’s decision was “easy” and “little surprise” but the central bank will need to do more in short order to avoid further damage to the economy.

“As we’ve been saying for some time, the Bank of Canada needs to materially lower rates ahead of the mortgage renewal wall which hits in early 2025 to have any chance of avoiding a recession,” he said in a note.

“There’s a strong sense that policymakers feel an urgency to continue the rate cutting cycle in September. The dovish language in the releases