The Bank of Canada is expected to reduce its key overnight lending rate to 2.5% this week after three straight holds.

Most leading economists are predicting that the Canadian central bank will make the move in order to hold inflation in check and offset unlagging GDP growth. The timing of Wednesday’s announcement poses a challenge because it will come just one day after Statistics Canada release its latest findings.

The U.S. Federal Reserve is also expected to cut its prime rate, after facing criticism from President Donald Trump for a series of holds that kept it at 4.25%. The Fed will also announce its decision on Wednesday.

TD Economics Senior Economist Marc Ercolao contended that market conditions justify another cut as Canada-U.S. trade uncertainty hinders Canadian employment and does not put a major dent in inflation.

“Overall, recent data flows have more or less tracked the bank’s forecast scenario consistent with a rising need for a further reduction in the policy rate,” he wrote in a. report provided to Connect.

But he also warned that StatCan’s upcoming inflation figure could prompt BoC Governor Tiff Macklem to stand pat. The BoC’s decision will arrive after Canada and the U.S. missed their August deadline for a new trade deal.

Tony Stillo, director of Economics at Oxford Economics, told The Canadian Press that the firm has revised its previous prediction that the BoC has finished its rate-cutting cycle.

“The equation has changed now that Canada has reduced and eliminated most of its retaliatory tariffs,” he said in an interview with the wire service.

“In the context of a weak economy, I think the bank is going to take an insurance policy out and do a quarter-point cut in September and we think it’ll be followed up by another quarter-point cut in October.”

Macklem has warned that economic shocks, rather than just trends, could affect the BoC’s future rate decisions. Contrary to its previous longstanding practice, the BoC is again expected to refrain issuing an economic outlook in conjunction with its decision.

“The Bank of Canada has been careful not to offer much guidance, but I think what the market will really be looking for is how likely is an October cut,” Douglas Porter, chief economist at Bank of Montreal, told The Globe and Mail.

Eric Lascelles, chief economist for RBC Global Asset Management told the Globe that the Fed’s anticipated cut is easier to foresee than the BoC’s next move.

“Certainly in the U.S. it does appear to be the next leg [of an easing cycle] and we can anticipate multiple cuts and perhaps sequentially at consecutive meetings,” he told his interviewer

Pictured: Bank of Canada Governor Tiff Macklem

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