BoC says more rate cuts to be gradual, datadependent
Rate cuts to happen if inflation continues to ease
Limits to how much BoC could diverge from Fed, Macklem says

OTTAWA, June 5 Reuters The Bank of Canada trimmed its key policy rate on Wednesday, the first G7 country to do so, in a widely expected move that will ease pressure on highly indebted consumers, but indicated further easing would be gradual and dependent on data.

Let39;s just enjoy the moment for a bit, said Governor Tiff Macklem at a press conference after announcing the central bank had reduced rates to 4.75 from 5, the first cut in four years.

Macklem stressed the timing of the next cut would depend on whether inflation continued its downward trajectory and the economy evolved in line with the bank39;s expectations.

Some economists predicted the BoC would cut again in July even though financial markets had priced in a 39 chance of a cut to 4.50 next month.

A majority of economists polled by Reuters had expected Wednesday39;s easing.

U.S. inflation is stickier and markets expect the Federal Reserve will cut rates only once this year. Economists have questioned whether the BoC is running the risk of diverging too much from the Fed.

There are limits to how far we can diverge from the United States, but we39;re not close to those limits, Macklem said.

Following the decision, the Canadian dollar pared its early gains and weakened by 0.22 to 1.3708 to the U.S. dollar, or 72.98 U.S. cents.

The BoC…