Inflation slows down: Bank of Canada on the verge of cutting rates again
Economists predict a slowdown in inflation, paving the way for further easing of monetary policy.
Economists expect that inflation in Canada has slowed down, which is good news for the Bank of Canada following the recent cut in the key interest rate. According to forecasts from BMO and TD, annual inflation in May decreased to 2.6% and 2.5%, respectively, compared to 2.7% in April.
On June 5, the Bank of Canada reduced its benchmark interest rate by 0.25 percentage points to 4.75%, becoming the first central bank among G7 countries to take this step. Bank Governor Tiff Macklem expressed confidence that inflation is approaching the target level of 2%.
Economists believe that the new inflation data could pave the way for another rate cut in July. James Orlando from TD noted that the next two inflation reports will be crucial for deciding on further measures.
For consumers, slowing inflation means a smaller increase in prices for goods, including food. In April, food prices rose by only 1.4% year-on-year, significantly lower than the previously observed double-digit inflation.
