Canadian Cpi To Jump In September

Canadian Cpi To Jump In September by Adam Rosen last updated on October 25, 2024

Forecast Shows Canadian Cpi To Jump 1.8% In September

According to economic forecasts, the Canadian CPI is likely to jump by 1.8% y/y in September. Statistics Canada will be releasing the headline CPI on Tuesday.

The Bank of Canada (BoC) is also expected to release the Core CPI, which doesn't include volatile components. During August, the core CPI reading was -0.1% on a monthly basis and +1.5% on a yearly basis. The August reading of headline CPI was above 2.0%, which is still the lowest level is only last seen in February 2021.

4.25% Interest Rate In Canada

The inflation data will be a key metric for the Bank of Canada as the central bank will adjust its easing cycle based on it. As a result, the data will also have a long-lasting impact on the Canadian Dollar (CAD).

At the last meetings (Jun, Jul, & Sep), the Bank of Canada lowered the policy rate by 25 bps each time. As of now, the interest rate in Canada is now hovering at 4.25%.

If we look at the performance of CAD, it has been in a losing position for the last 9 days. This has sent the USD/CAD higher towards the 1.3800.

Some of the analysts believe that the upcoming Canadian inflation will likely fall below the BoC. On the other hand, some believe that it will rise higher and threaten the upcoming rate cut.

If the inflation report is in line with the forecasts, it will make it easy for the BoC to continue its easing policy that started a few months ago.

The last rate cut by the BoC was on 4 September... At that time, the BoC Governor highlighted that a 25 bps rate cut was the appropriate step. He also added that the central bank officials looked at different scenarios.

One of these scenarios was to go with 50 bps, which means we can't discount this possibility at the next meeting.