OTTAWA –
Canada’s annual inflation rate reached the central bank’s 2 per cent target in August, data showed on Tuesday, fuelling hopes for a 50-basis-point interest rate cut by the country’s central bank next month.
The consumer price index posted its smallest rate of increase since February 2021 and the closely watched core price measures also cooled to their lowest levels in 40 months, Statistics Canada said.
Consumer prices fell 0.2 per cent on a month-on-month basis, it said.
“We expect central bankers to slash their policy rate by 50 basis points next month in an effort to expedite the return to a more neutral setting,” Royce Mendes, head of macro strategy at Desjardins Group, wrote in a report.
A neutral setting is when the policy rate is around the so-called neutral rate of interest, which is between 2.25 per cent and 3.25 per cent in Canada, a range where interest rates …