(Bloomberg) -- Bank of Nova Scotia is likely to shift its expectation for Canada’s first interest-rate cut to July, abandoning its September call as evidence of slowing price pressures mounts.

That’s according to the bank’s chief economist Jean-Francois Perrault, who spoke with BNN Bloomberg Television after the release of April consumer price data on Tuesday. “Clearly this inflation report confirms rate cuts are coming,” he said.

If Scotiabank officially moves its call to July, that would mean all of Canada’s six biggest lenders now expect the Bank of Canada to start lowering the benchmark overnight rate from 5% in either June or July. Statistics Canada has reported four consecutive months of easing core inflation.

Royal Bank of Canada, Canadian Imperial Bank of Commerce and Bank of Montreal see a first cut in June, while Toronto-Dominion Bank and National Bank of Canada are in the July camp that Scotiabank has tentatively joined.

Traders in overnight swaps increased their bets for a cut at the bank’s June 5 meeting to just under two-thirds, from about 40% before the release of inflation data. A 25 basis-point cut is fully priced by the July 24 meeting. 

Waiting until July to start easing policy would give officials more time to confirm inflation dynamics and also weigh the strength of Canada’s economic growth, Perrault said.

Preliminary data suggest gross domestic product rose 2.5% annualized in the first quarter, slightly below the central bank’s forecast of 2.8%. Statistics Canada will publish the official first-quarter GDP numbers on May 31. 

The central bank should also consider waiting for a clearer signal on the Federal Reserve’s policy path and a potential resurgence in Canada’s housing market as it weighs whether to cut rates in June or July, he said.

“There is absolutely an expectation that when rates start to come down, that you’ll see a pickup in the housing market,” Perrault said.

Separately, Scotiabank economist Derek Holt wrote in a report to investors that April’s inflation print marked a fourth “soft reading” in a row and that a rate cut in July is “most probable.”

“The key question is whether that’s enough to prompt the Bank of Canada to cut as soon as two weeks from now on June 5 or whether patience while seeking more data and other arguments to holding off will dominate,” Holt said.

--With assistance from Jay Zhao-Murray and Thomas Seal.

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