Canada’S Inflation Rate Hits Central Bank Target

(MENAFN- Yolo Wire) Canadian %Inflation continued its downward trend in August, falling to the Bank of Canada’s target rate of 2 percent for the first time in three years. Canada has become one of the first developed countries to reach that milestone following the pandemic-induced inflation era. At 2 percent, the print is below the central bank’s own inflation predictions of 2.3 percent for this quarter.

The Bank of Canada's preferred measures of underlying inflation also continued to cool, with annual weighted median and trimmed mean CPI rising 2.35 percent on average, the slowest advance since April 2021 and down significantly from 2.55 percent in July. Traditional core inflation, which excludes more volatile food and energy, moderated to 2.4 percent from 2.7 percent in June.

However, hopes of a 50 basis point rate cut—similar to what the Federal Reserve did this week—were dampened by the release of Canada's central bank meeting minutes. At the August meeting, deliberations did not show any hints that monetary policymakers weighed a steeper cut of half a percentage point. But, while policymakers remained concerned about growth, the bankers also voiced concerns about the strength of the country's housing market. If the pace continues, rate cuts could slow, according to the minutes.

The Bank of Canada, one of the first to start cutting rates, has already lowered its rating three times this year. Traders will now wait for the Bank of Canada’s reaction at its next rate announcement on October 23.

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