08:48 AM EDT, 09/12/2025 (MT Newswires) -- Though inflation remains high, central banks seem inclined to treat the strength in inflation as transitory, as was the original thinking during the COVID-19 pandemic, said Scotiabank.

Combined with below-potential growth in the United States and Canada, Scotiaban state it believes the Bank of Canada will cut by 25 basis points at each of the next two meetings as a form of insurance against weaker growth and inflation.

The BoC is scheduled to release its next policy statement at 9:45 a.m. ET Wednesday.

The bank expects those cuts to be reversed in the second half of 2026 as it believes inflation will prove to be more persistent than currently believed by the BoC. Scotiabank now thinks the Federal Reserve will cut by 25 basis points at each of the next six meetings.

The bank forecasts Canadian growth to accelerate from 1.2% this year to 1.6% as fiscal policy acts to boost the country's growth potential.