BENGALURU — The Bank of Canada will cut its overnight rate by a quarter point on September 17 as the labour market deteriorates and economic activity weakens, according to most economists in a Reuters poll, who also expect at least one more cut next quarter.
Canada’s central bank has faced growing pressure to resume easing after holding rates steady since March, following a cumulative 225-basis-point reduction – one of the most aggressive among its G10 peers.
Last week, official data showed the economy shed 65,500 jobs in August, pushing the unemployment rate to a nine-year high outside of pandemic periods.
That, alongside a more severe than expected 1.6 percent contraction in economic activity last quarter due to the effect on exports of US tariffs on steel, aluminum, and automobiles, fuelled rate cut bets and pushed the Canadian dollar down.
Nearly 80 percent of economists, 25 of 32, in a September 9-12 Reuters poll said the BoC would cut its key rate by 25 basis points to 2.50 percent in the upcoming policy meeting, a bigger majority than the 64 percent in a July survey and in line with market pricing.
Seven economists expected it to hold rates again.
The Federal Reserve is widely expected to cut rates for the first time this year on September 17.
