Economists are forecasting inflation reaccelerated last month, reversing previous progress made as gas prices push inflation higher.
The price of oil rose steadily throughout the summer, surpassing US$90 a barrel this week. By comparison, June prices were hovering near US$70 a barrel.
The Bank of Canada has kept the door open to more rate hikes in part because it expects getting inflation down to two per cent will take some time. But economists say the recent slack in the economy will likely convince the central bank to remain on the sidelines.Article content Orlando said the fact that the economy is slowing gives the Bank of Canada justification to hold interest rates where they are, even if inflation is ticking higher in the short term.
“While we’re not yet seeing convincing evidence that underlying inflationary pressures are moving towards the two per cent target from where they’ve been stuck for some time now, I believe that it’s just a matter of time before these interest rate hikes work their way through this system, to drag down economic activity enough to pull down inflation to two per cent,” Mendes said.
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