Greg Quinn and Ari Altstedter, Bloomberg News | August 26, 2015 | 

The Bank of Canada will cut interest rates at its Sept. 9 meeting, National Bank Financial says, becoming the first major bank to call for a cut amid signs market turmoil threatens an economic recovery.

Speaking by phone from Montreal on Wednesday, economist Paul-Andre Pinsonnault predicted Governor Stephen Poloz will cut the policy rate by a quarter point to 0.25 percent next month, matching a record low set in 2009 during the global financial crisis.

The odds of a September rate cut have risen to 31 percent from 18 percent a week ago based on trading in swaps markets. Signs of global economic turmoil are being seen from falling stock market and crude oil prices to the weakest Canadian dollar since 2004.

“If over time the international situation improves and Canadian skies clear, the Bank could always withdraw some of its accommodation,” National Bank Financial economists wrote in a research note Wednesday. “Better one rate cut too many than sorrow for not having acted sooner.”

The government’s ability to offer quick fiscal stimulus is limited by campaigning for a federal election on Oct. 19, the report said.

After the September announcement, the Bank of Canada’s next rate decision is scheduled for Oct. 21.

Bloomberg.com