The Bank of Canada is set to announce its latest decision on interest rates on Wednesday amid speculation that the central bank may begin to cut interest rates.

In general, financial markets expect the bank to lower the key lending rate by a quarter of a percentage point, but this view is by no means universal, as some expect it to wait.

Bank of Canada Governor Tiff Macklem stated that a rate cut is within the realm of possibilities, but the decision will be guided by economic data. He mentioned that the central bank sees what it needs to see, but wants to observe it for a longer period to be confident that progress towards price stability will continue.

The annual inflation rate for April was 2.7 percent compared to 2.9 percent in March.

The interest rate decision comes on the heels of a report from Statistics Canada last week which showed that economic growth in the first quarter was below the Bank of Canada's expectations, and the report also revised its reading for growth in the fourth quarter of 2023 downward.

However, the job report for April showed that employment rose by 90,000 during the month, marking the largest increase in employment in over a year.