Analysts are predicting that the Bank of Canada will introduce a second overnight interest-rate cut after inflation maintained a downward trend in June.

Statistics Canada reported this week that the consumer price index rose 2.7% year-over-year in June, down from 2.9% in May.

“A return to tepid consumer price growth likely seals the deal,” Royce Mendes, head of macro strategy at Desjardins Securities, said in a research note. “Along with significant declines in inflation expectations and a further normalization in corporate pricing behaviour, the latest inflation data build a strong case for continuing the rate cutting cycle without delay.”

The BoC is scheduled to make its next interest-rate policy decision June 24. The central bank reduced the key overnight rate to 4.75% from 5% in June, marking the first cut following a prolonged series of holds and rapid increases designed to bring inflation closer to 2%.

Several economists have cited shelter costs as the primary cause of inflation.

“Recent data have supported a cut, with the job market loosening and wage gains decelerating from elevated levels,” Toronto-Dominion Bank senior economist James Orlando said in a client note.

“From our view, the story hasn’t changed. The BoC is in a cutting cycle. Whether or not it follows through with a slightly quicker pace of cuts next week, Canadians should expect rates to be steadily reduced over the rest of this year and next.”

The market began pricing in cuts prior to the BoC’s first reduction. Macklem has indicated that more cuts are likely if inflation continues to decrease.

Pictured: Bank of Canada Governor Tiff Macklem