Market bets surge for BoC rate cut at next meeting. Economists left guessing why

Traders in money markets over the past few days have been reassessing the odds that another Bank of Canada rate cut looms this September - and have become increasingly convinced more monetary easing is coming.

Implied interest rate probabilities in swaps markets now suggest nearly 93 per cent odds of another quarter point rate cut at the bank’s next policy meeting on Sept. 4, according to LSEG data.

Last Wednesday, the Bank of Canada cut its key overnight rate to 4.50 per cent. In the moments both before and after that decision, swaps market probabilities suggested the odds of whether there would be another cut come September was pretty much down to a coin flip.