By Promit Mukherjee and Fergal Smith
OTTAWA (Reuters) – The Bank of Canada is shifting its focus to boosting the economy rather than suppressing inflation, which raises prospects of further interest rate cuts in the coming months, analysts say.
The Canadian central bank lowered its benchmark rate for a second straight month on Wednesday, cutting by 25 basis points to 4.50%. It said downside risks to inflation are taking on increased weight in its deliberations.
Investors see a roughly 60% chance the BoC will ease again at its next policy meeting in September. Investors are pricing in 44 basis points of easing in total by the end of the year, which implies a policy rate 6 basis points below previous expectations.
A faster pace of rate cuts would provide relief for heavily indebted Canadian households. It could also increase pressure on the Canadian dollar, which weakened on Thursday to a three-month low of 1.3848 per U.S. dollar, or…
