Lower oil prices are easing pressure on national inflation
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November’s inflation numbers are further proof that there’s no need for the Bank of Canada to hike interest rates at the beginning of next year, according to market observers.
Latest data from Statistics Canada indicated that the annual pace of inflation ground to a relative crawl of 1.7% last month, a marked decline from October’s 2.4% level.
Reduced pressure due to lower petroleum prices was cited as the main factor in this development. StatsCan explained that if gas is not taken into account, November 2018 inflation would’ve been 1.9%
“With some of the volatility we’ve seen in the financial markets and the lower oil prices’ impact on economic activity in Western Canada, the Bank of Canada can afford to be cautious and will be in no rush to their next rate hike,” TD Bank senior economist James Marple told The Canadian Press.
Read more: Rate hikes will impede many Canadians’ home-buying plans
"Bad news for Alberta has been good news for Canadian consumers, as cheaper gasoline has brought inflation down to earth,” CIBC chief economist Avery Shenfeld explained in a client note.
Earlier this week, BoC governor Stephen Poloz assured that the risk of a recession next year is counteracted by the economy’s robust fundamentals.
"We’re certainly not expecting a recession in 2019 but I do think that everybody needs to be prepared for volatility,” Poloz said in an interview with CTV News.
