Bank of Canada expected to hold key rate again

Avery Shenfeld doesn't think the Bank of Canada will cut its benchmark interest rate at its decision on Wednesday, but if it does, he said it will be a "pleasant surprise."

"There's always a chance that they'll surprise with the rate cut," the chief economist of CIBC said.

Most economists are also expecting the Bank of Canada will hold its policy rate steady at 2.75 per cent for a third consecutive decision later this week.

Stubbornness on the inflation front and surprise strength in the labour market have quashed arguments for further easing since the central bank's June decision.

The Canadian economy gained an unexpected 83,000 jobs in June, Statistics Canada reported earlier this month, driving the unemployment rate lower for the first time since January.

Shenfield expects Canada's tariff dispute with the United States led to an economic contraction in the second quarter of the year.

Picture Courtesy: THE CANADIAN PRESS/Adrian Wyld