Subdued inflation reinforces calls for a third consecutive rate cut on Sept. 4
Canada ’s inflation rate is steadily moving back down to the Bank of Canada ’s 2-per-cent target, solidifying an already strong case for the central bank to cut interest rates again next month.
“An inflation report like this seals the deal for another rate cut at the Bank of Canada’s September meeting,” Tiago Figueiredo, macro strategist at Desjardins Securities, wrote in a client note. “It is also likely to keep central bankers cutting rates for the next few meetings.” “We need growth to start picking up,” Governor Tiff Macklem told a news conference last month. “We need job creation to start picking up, to absorb the excess supply in the economy and get inflation sustainably back to target.”
Grocery prices rose 2.1 per cent in July on an annual basis, matching the increase in June. Groceries have experienced a pullback from peak increases of roughly 11 per cent in late 2022 and early 2023. Still, a large portion of homeowners will be renewing their mortgages at higher interest rates over the next two years – something that is factoring into central bankers’ discussions.
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