The Bank of Canada announced on Wednesday that it will again keep the overnight interest rate at 4.5 percent for the second consecutive time.

The latest Consumer Price Index report showed that the inflation rate in Canada has slowed to 5.2 percent, its lowest level in over a year. Bond yields in Canada also fell, indicating that the market is betting on future interest rate cuts. But even with inflation continuing to decline, economists are divided on when we might finally see lower interest rates.

For his part, Sal Guatieri, Senior Economist and Director at BMO Capital Markets, said he does not expect an interest rate cut until "early next year."

He added to CTV News on Wednesday: "If we see more weakness in the economy—a real recession—yes, it is almost certain that the Bank of Canada will pivot and cut rates. But we don’t see that. We are only witnessing a very mild slowdown and a resumption of growth by the end of this year."

Also, instead of a sharp recession, Guatieri said BMO expects a "technical landing in the next two quarters," with the recession expected to be "very mild, very shallow" and ending by the end of this year.

Meanwhile, Randall Bartlett, Chief Canadian Economist at Desjardins Economics, expects the Bank of Canada to cut rates "as early as the end of the year," given how quickly inflation is slowing and how some banks in the United States have slowed, facing trouble last month.

Canada also still has a strong labor market; in the latest labor report, StatCan noted that Canada gained 35,000 jobs while the unemployment rate remained unchanged at 5.0 percent, near its record lows.

Economists also said that for interest rate cuts to happen, there must be a "convincing slowdown in the labor market and a erosion in economic momentum."

They also wrote: "This places the timing near the end of the year or early 2024. In other words, just as the interest rate hike cycle in Canada and the United States began in close alignment, so too will the interest rate cut cycle."

When asked whether rate cuts are on the horizon, Bank of Canada Governor Tiff Macklem told reporters on Wednesday that the rate cuts expected by bond markets "don’t look like the most likely scenario for us," and did not rule out a rate hike in the future to reduce inflation to 2 percent.

Also, despite Macklem’s efforts to quell market speculation that a rate cut is on the way, Derek Holt, Head of Capital Markets Economics at Scotiabank, said Bank of Canada’s own forecasts show a return to 2 percent inflation in the medium term.