04:23 PM EDT, 09/15/2025 (MT Newswires) -- A late rally extended gains on the Toronto Stock Exchange and with that brought about a fresh record close Monday as more market watchers believe not only will the Bank of Canada cut its key benchmark interest rate on Wednesday, but will follow that up with another in October, even as National Bank cited tomorroway's inflation report as "a source of uncertainty".

The TSX added the best part of 60 points over the last 30 minutes of trade to finish up 147.20 points or 0.5% at 29,431.02, with most sectors higher, led by Base Metals up near 1.5%. This was the 14th record in the last 17 sessions for the index.

Of commodities, gold traded at a record high midafternoon on Monday, rising above US$2,700 as traders await an expected U.S. Federal Reserve interest-rate cut later this week. Gold for December delivery was up US$33.60 to US$3,720.00 per ounce, edging lower from Friday's record close.

WTI Crude Oil (Nymex) was up 1% while Brent Crude (ICE) was up 0.75%.

The Wall Street Journal noted Nymex natural gas settled up 3.5% at US$3.043/mmBtu as the front month continues to waver around the $3 level.

After holding steady for the last three meetings, the Bank of Canada is set to lower the overnight target by 25 bps to 2.5% on Wednesday.

National Bank in a preview noted OIS markets judge a cut to be likely with about 90% implied easing odds. National said an inflation report just over 24 hours before the decision is a source of uncertainty, but it doesn't expect it to derail a cut.

Policymakers, National Bank noted, can cite an accumulation of weak data, most prominently jobs data but also GDP, in justifying a cut. It said there may be an acknowledgement that resilience looks to be fading. But at the same time, National added, the BoC is likely to reiterate that there are still some ongoing pressures on underlying inflation which is "assessed to be running around 2.5%".

Assuming the BoC cuts, a follow-on move in October should be viewed as more likely than not, according to National Bank. As far as guidance is concerned, National noted, the rate statement may contain a copy-paste from July by reiterating that "there may be a need for a reduction in the policy interest rate". However, it said, the BoC will seek to retain optionality by stating that they'll be weighing upside inflation pressures from tariffs/the reconfiguration of trade against downside inflation pressures from a weaker economy. National Bank currently expects the BoC to cut again in October.

National noted the BoC won't publish a new MPR, so we'll have to wait until October for new projections. At this point, National sees growth marginally weaker than the BoC expected in July, while headline inflation is tracking a bit firmer.

Despite CORRA setting near 5 bps above target for the last two weeks, National Bank doesn't expect an additional cut in the deposit rate. It noted the last 5 bp deposit rate cut came after months of CORRA pressure. "The lack of overnight repo operations recently suggests there's little concern, at least for now. As for balance sheet policy, we are looking for an announcement that T-bill purchases will start soon, in line with earlier guidance."

Ahead of Tuesday's inflation report -- which is not seen derailing Wednesday's rate cut -- the Scotiabank duo of Rene Lalonde, Director, Modelling and Forecasting and Farah Omran, Senior Economist, noted the post-pandemic surge in inflation raised some questions as to which measure of core inflation was the best indicator of future total inflation, the BoC's official target. At that time Scotia found that CPI excluding food, energy and the effect of indirect taxes (CPIXFET) outperformed other measures while having the added benefit of being more intuitive, and easier to communicate to markets and households.

Now, with inflation largely back within the BoC range, a Scotia team has repeated this exercise, comparing CPI-trim, CPI-median, and CPIXFET. Once again, CPIXFET proves to be the most accurate predictor of headline inflation, Lalonde and Omran said.