08:01 AM EDT, 09/04/2024 (MT Newswires) -- It's Bank of Canada (BoC) day as the the central bank is widely expected to cut rates for a third straight meeting on Wednesday, said Bank of Montreal (BMO).

Governor Tiff Macklem previously signaled that it would be "reasonable" to anticipate further easing if inflation continued to slow. Headline inflation fell to 2.5% y/y in July, while core measures also eased.

Meantime, the economy remains lackluster with gross domestic product (GDP) growth unable to keep up with population growth, noted the bank. The BoC is poised to cut rates another 25 bps, bringing policy rates to 4.25%.

Policymakers have a clear path to neutral and it's just a question of how fast Canada gets there, and if stimulative policy becomes necessary at some point in 2025, pointed out BMO.

Canada's merchandise trade surplus Wednesday (at 8:30 a.m. ET) is expected to come in at C$0.5 billion in July, in line with the previous month, stated the bank. Higher oil prices look to support energy shipments, while a positive manufacturing flash should lift imports and non-energy exports.

Wednesday's report is expected to include downward revisions to previous months following Q2 current account release in the previous week, stated the bank. Looking ahead, additional energy export capacity will continue to support trade in Q3, though we still have a couple of months of data and revisions to go.