BNP Paribas’ top North American currency strategist thinks Stephen Poloz might deliver a shock to markets with an interest rate cut on Wednesday. In an interview with BNN, BNP Paribas Head of North American FX strategy Daniel Katzive said the rising cost of borrowing due to increasing U.S. rates may prompt Poloz to cut rates once again.

“The Bank of Canada seemed in its last statement to be anxious to distinguish the needs of Canada’s economy from the U.S. economy,” he said. “There was concern financial conditions might tighten too quickly in Canada as the Fed moved into its rate hike cycle.”

Katzive said the Bank of Canada has exhibited an itchy trigger finger in the past, and could surprise investors who have priced in a 98.5 per cent chance the central bank holds the benchmark rate at 0.5 per cent.

“We’ve seen the Bank of Canada deliver pre-emptive easing before, and we think they might do it again,” he said. “The Bank of Canada will deliver some pre-emptive medicine to address [weak economic growth.]”

Katzive said regardless of whether Poloz moves on rates, he expects the Canadian dollar to weaken further from the current 76-cent level.

“Even if it doesn’t happen, if the Bank of Canada is on hold, with the Fed in rate hike mode and the Bank of Canada on hold over the next year or two … the [Canadian] dollar should be weaker than it is now.”