The Bank of Canada cuts interest rates again. Will the Fed follow?

After becoming the first central bank in the G7 to cut interest rates back in June, the Bank of Canada lowered rates again on Wednesday, by 25 basis points to 4.5% — and suggested there may be more cuts to come.

In its decision, the bank noted that global growth is expected to proceed at around 3% and that inflation is expected to cool gradually. It also noted that in the US, where the economy has remained hot despite inflation, “the anticipated economic slowdown is materializing, with consumption growth moderating.” That’s sending US inflation — which hit its lowest point in 12 months in June — down as well.

According to a recent Reuters poll of economists, experts still expect two rate cuts — the current rate is 5.5% — by the Federal Reserve this year, with the first not coming before September. Those polled expect the Fed to leave rates unchanged at their meeting this month. But Fed officials have signaled that a rate cut is getting “closer.”

On Thursday, the Bureau of Labor Statistics reported that US GDP grew by 2.8% in the second quarter this year driven by, among other things, higher consumer spending while inflation sits at around 3% — data which bolsters expectations that the Fed will wait until September for a rate cut.