Canadian Inflation Rises To 3.3% During July, More Chances Of A Rate Hike
As per the latest data from Canada, the country's annual inflation was recorded at 3.3% during July. Similarly, other core measures used to gauge inflation in Canada also remain elevated.
That's why a growing number of experts now believe that the Bank of Canada will likely introduce a new rate hike at the next meeting. Similarly, the recent reading also highlights how inflation remains stubbornly high in Canada despite all the recent measures.
According to a recent poll of economists, the inflation in Canada was expected to be higher than 3.0% from an earlier value of 2.8% during June. Similarly, the consumer price index jumped by 0.6% MoM, while the forecast was only for a 0.3% jump.
Canada: CPI-Median Reading For July Was 3.65%
The Bank of Canada also uses the CPI-trim and the CPI-median for evaluating the current levels of inflation. The average value of these measures was recorded at 3.65% during July, while it was around 3.70% just a month ago.
After evaluating the situation, an economist from Scotiabank said the inflation in Canada is now facing multiple upside risks. That's why they also added that the rate hike cycle in Canada is far from over.
If we look around, the money markets are also forecasting a rate hike at the September meeting. For now, the chances of a rate hike by the BoC are around 35%, while the earlier value was 27% before the release of inflation data.
After the data release, the CAD (Canadian Dollar) was last seen at 1.3456 against the USD, with a drop of 0.1%. Earlier, the USD/CAD pair was last seen at 1.35, which was a 1-week low.
The Bank of Canada (BoC) was expecting inflation to be near 3% in July, with the long-term target for 2025 to be near 2%. But after the recent reading, it appears that things are not going in favor of the BoC (bank of Canda) short & long-term targets.