Today’s update to the semi-annual Monetary Policy Report from the Bank of Canada suggests one more 25 basis point cut to interest rates, suggests TD Economics.

TD Economics says the report, “confirmed that Canadian monetary authorities remain steadfast in their optimistic view of Canada’s economic prospects.” It notes that the central bank hasn’t changed its views much from its May report. If anything, TD notes that the bank seems to be signaling that it now harbours even less concern that it had for the outlook in the May report.

“In fact, the bank pointed to precisely the same factors as the May MPR to justify its sanguine take on the economy. First, and certainly foremost, the bank remains just as confident as it was that a rebound in U.S. economic growth is in store for the second half of the year.” Canada’s central bank drew attention to the tax cuts now in the U.S. pipeline, and said such measures should promote U.S. consumer spending.

TD Economics said the bank sees tax relief in Canada, combined with rate cuts and reduced inventory levels, keeping Canadian economic growth ticking over for the next few quarters.

“In sum, today’s report should leave little doubt that the Bank of Canada will approach any further interest-rate cuts with caution, suggesting that the current cycle of monetary easing has just about run its course. Barring a significant deterioration in U.S. economic conditions — which is not likely — the bank will probably limit any further rate cuts to a final 25 basis point insurance policy at its next fixed announcement date on August 28.”