Recently, Tony Stillo and Michael Davenport from Oxford Economics noted that when the Bank of Canada undertook its latest interest rate cut, it did not completely abandon its previous guidance that each meeting’s decision on rate cuts would be based on the current economic situation. This move reflects the Bank of Canada’s concern over the continued growth in housing and service sector inflation. Analysts speculate that this suggests a low probability of a significant 50 basis point cut in the near term. However, given that the Bank of Canada is now refocusing on assessing the downside risks to the economy, it is expected that in the coming months, the slowdown in economic activity and a decrease in inflationary pressures will prompt the bank to lower interest rates by 25 basis points in October and December. This steady and measured approach to cutting interest rates aims to gradually adjust the policy rate to 2.25%, which is the lower limit of the neutral interest rate predicted by the Bank of Canada. Overall, this pace of adjustment is anticipated to reach the target interest rate level before September 2025.