Is another rate cut on the way next week?
Canada’s inflation rate fell to 1.6% in September, hitting its slowest pace for more than three years thanks mainly to lower prices at the pump.
Statistics Canada said on Tuesday that the consumer price index (CPI) slid to its lowest level last month since February 2021, when inflation came in at 1.1%, as gas prices plummeted 10.7% compared with the same time in 2023.
Inflation excluding gas prices came in at a clip of 2.2% in September, StatCan said – but despite the milder overall figures, renters and mortgagors are seeing little relief. Mortgage interest costs were 16.7% higher than September 2023, while rent spiked by 8.2% despite moderating slightly over August.
The report marks a continuing sign of Canada’s progress on inflation, which ballooned to a four-decade high of 8.1% in the middle of 2022 but has ticked steadily downwards thanks in large part to a series of aggressive interest rate hikes by the Bank of Canada.
The central bank is scheduled to meet on interest rates next Wednesday (October 23), with today’s reading – which sees inflation fall below the bank’s target of 2%, although still within its preferred range of 1-3% – likely giving it the green light to push ahead with a rate cut.
The Bank has already lowered its benchmark rate three times since the summer, making three consecutive 25-basis-point cuts amid signs of a slowing economy and easing inflation pressures.
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