Economists expect inflation continued its downward trend last month, giving the Bank of Canada the all-clear to continue cutting its benchmark interest rate.
“We are looking for headline inflation to cool below the bank’s two-per-cent target in September,” said BMO economist Shelly Kaushik.
Underlying inflation pressures are continuing to slow, said Nathan Janzen, assistant chief economist at RBC, but shelter costs, especially mortgage payments, have continued to put upward pressure on the overall number. However, the labour market was surprisingly stronger in September, adding more than twice as many jobs as in August, while the unemployment rate ticked lower to 6.5 per cent.
"I think there's just growing evidence that interest rates are higher than they need to be, and potentially substantially higher than they need to be," he said.
Headline Inflation Nathan Janzen
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