2 weeks Ago
The latest on inflation in Canada Statistics Canada will publish its Consumer Price Index report for August this morning at 8:30 a.m. ET.
Financial analysts expect the annual inflation rate hit 2.1 per cent in August, down from 2.5 per cent in July – and could maybe even touch the Bank of Canada’s 2-per-cent target.
Today's CPI numbers are a prelude to additional interest-rate cuts from the Bank of Canada at its October decision, and for the rest of the year. Further reading: Find updates from our reporters and columnists below. August inflation report to be released today Pedestrians walk past the Bank of Canada in Ottawa, Ontario, Canada, on July 12, 2023.
DAVE CHAN/AFP/Getty Images Inflation is widely anticipated to take another big step down on Tuesday – and maybe even touch the Bank of Canada’s 2-per-cent target. Financial analysts expect the annual inflation rate hit 2.1 per cent in August, down from 2.
5 per cent in July . Statistics Canada will publish its Consumer Price Index report for August on Tuesday morning. If that prediction pans out, it would be the lowest inflation rate since February, 2021.
Economists at CIBC Capital Markets, Desjardins Securities and other lenders think inflation will subside to 2 per cent. A sluggish economy, rising joblessness and lower oil prices are helping to cool inflation after it hit a four-decade high in 2022. Tuesday’s CPI numbers are a prelude to additional interest-rate cuts from the Bank of Canada , which has trimmed its benchmark rate at three consecutive meetings this year.
Increasingly, the question is not if the central bank will cut, but by how much. Interest rate swaps, which capture market expectations of monetary policy, are pricing in a 50-50 chance that the BoC cuts rates by 50 basis points at its next meeting on Oct. 23, according to Bloomberg data.
(A basis point is 1/100th of a percentage point.) Thus far in the easing cycle, the BoC has moved in 25-basis-point increments. The U.
S. Federal Reserve is universally expected to begin cutting interest rates on Wednesday , with fervent speculation over whether it’s a quarter-point or a half-point move lower. The oil market is doing lots of heavy lifting in the inflation fight of late.
West Texas Intermediate – a benchmark crude – has fallen roughly 10 per cent in price since the end of July. “The steep drop in gasoline prices that started in mid-August has continued into the first half of September and as a result inflation will likely ease again and drop modestly below the 2-per-cent target,” Andrew Grantham, senior economist at CIBC, said in a client note. “With inflation no longer threatening, the Bank of Canada has plenty of room to cut interest rates and help spur some growth in the economy.
” – Matt Lundy.
