Bank of Canada Expected to Cut Interest Rate Again

Market Anticipates Drop of 25 Basis Points Amid Economic Downturn

Analysts Predict Move After Strong U.S. Economic Data

OTTAWA, July 22 (Reuters) - The Bank of Canada is widely expected to lower its key interest rate for the second consecutive month on Wednesday, as a recent drop in economic activity weighs on the country's outlook.

Financial institutions like Bank of Montreal are predicting a 25 basis point cut, bringing the interest rate down to 4.25%. The decision follows the release of data from the Labor Force Survey in July, which revealed a decline in employment and increased unemployment.

The move comes after the U.S. Federal Reserve lowered its own interest rates last week, citing concerns about the global economy and ongoing trade tensions. Economists believe the Bank of Canada may be adopting a similar approach to stimulate growth and support the Canadian economy.

In a note to investors, Doug Porter of Bank of Montreal wrote that the bank's "expectation is for a cut tomorrow" due to the deterioration in economic data and the Fed's recent rate reduction.

The Bank of Canada's decision will be closely watched by economists and markets as it sets the tone for monetary policy in the coming months. A rate cut would signal a cautious approach by the central bank amid the current economic headwinds.