- Canadian inflation has fallen to the Bank of Canada’s stated 2 per cent target for the first time since February 2021
- Inflation has been within the Bank of Canada’s target range of 1-3 per cent for the past eight months
- The institution’s next interest rate decision is scheduled for Oct. 23
- The TSX is up by 0.14 per cent on the news as of 11:23 am ET
Canadian inflation has fallen to the Bank of Canada’s stated 2 per cent target for the first time since February 2021 thanks to a drop in gasoline prices, and now finds itself at the midpoint of the institution’s target range of 1-3 per cent.
The milestone supports the likelihood of further interest rate cuts, as the labour market continues to weaken and core measures of inflation continue to fall in response to an assertive hiking cycle from 0.25 per cent in 2022 to 5 per cent in April 2024.
The TSX is up by a tepid 0.14 per cent on the news as of 11:23 am ET, while bond yields and the loonie have given up ground, with the latter looking like it will put up losses for the fourth consecutive day.
August is the eighth month in a row that inflation has been within the Bank of Canada’s target range, down from a high of 8.1 per cent in June 2022, leading the institution to cut rates three times since June. Its chief concerns remain mortgage interest costs and rent, the largest contributors to inflation today, rising by 18.8 per cent and 8.9 per cent year-over-year, respectively.
The market will have a chance to react to September’s inflation report before the Bank of Canada’s next rate decision on Oct. 23.
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