Here’s why economists expect ‘good news’ from the August inflation report
The Bank of Canada is set to get a fresh look at inflation figures this week as some economists expect another big step towards the central bank’s two per cent target.
Statistics Canada will release consumer price index figures for August on Tuesday, coming off July when the annual rate of inflation cooled to 2.5 per cent.
Royal Bank of Canada is expecting Canadians got even more inflation relief last month, with its analysis indicating that the annual rate likely slowed sharply to 2.1 per cent.
RBC economists Nathan Janzen and Claire Fan in a note attributed that drop largely to the pullback in gas prices in August, but they added that the Bank of Canada’s preferred measures of core inflation are also expected to show more signs of cooling.
James Orlando, director of economics at TD Bank, tells Global News that he’s also “expecting to get a pretty encouraging report for Canadian inflation this month.”
Orlando says the closer inflation gets to the Bank of Canada’s two per cent target, the more “leeway” the central bank has to continue cutting its benchmark interest rate and providing relief on borrowing costs for cash-strapped Canadian consumers and businesses.
The Bank of Canada has delivered three interest rate cuts in a row since June. TD Bank and other major lenders are anticipating a series of interest rate cuts through the end of the year and into 2025.
“This is all just good news for Canadians,” Orlando says.
Inflation reports have been “must-see events” in Canada over recent years as the central bank grappled with how high its policy rate needed to be to tame stubborn price pressures, Orlando says.
With growing confidence that inflation is now “well-behaved,” he says monetary policymakers can turn their attention
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