Could a Bank of Canada rate cut be set to follow?
Canada’s annual inflation rate fell again in April, dropping to 2.7% compared with 2.9% in March in a further indication that consumer price growth is moderating.
Statistics Canada said on Tuesday that the year-over-year rate of core inflation declined for the fourth consecutive month, with April’s reading also marking the fourth month in a row that the rate has fallen within the Bank of Canada’s target range.
Two core inflation measures dipped to an annual average pace of 2.75% – but while that was lower than expected, a three-month moving average of the rate also jumped compared with March (from 1.35% to 1.64%).
That increase in the three-month average could give the central bank some pause for thought as it weighs up whether to cut rates in June, although a majority of economists still expect the Bank to bring rates down by 25 basis points at its next announcement, according to Bloomberg.
Mortgage interest costs, long the single biggest contributor to the overall inflation rate, continued to balloon in April. Those costs surged by 24.5% year over year, with rents up 8.2% and gasoline prices seeing a further rise – increasing by 6.1% in April compared with 4.5% the prior month.
The Bank of Canada is next scheduled to meet on June 5, with today’s report the last inflation reading set to arrive before it makes its hotly anticipated decision on rates.
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