Good News for Your Wallet: Canadas Inflation Drops to 1.6%

Happy surprised African American businessman reading good news about canadas inflation

Big changes are happening up north! This September, Canadas inflation rate hit a cool 1.6%, mostly thanks to lower gas prices.

This news from Statistics Canada comes just in time for the Bank of Canada’s next big meeting on October 23. Now everyone’s buzzing: Will this mean bigger rate cuts?

While experts guessed inflation would drop to about 1.9%, the actual drop was even steeper. This surprise might just push the Bank of Canada to slash rates more than we’ve seen lately. Imagine—rates might drop by 50 basis points (that’s half a percent) instead of the usual 25!

Douglas Porter from BMO thinks it’s pretty likely. He’s noticed the market’s leaning towards expecting up to 75 basis points in cuts by the end of the year. With the economy not exactly buzzing and everyone feeling a bit unsure, a bigger rate cut could give us the boost we need.

Remember last year when the Bank of Canada was hiking rates left and right to keep inflation in check? They jacked up rates ten times from March 2022 to last summer to fight an inflation peak of 8.1%. The idea was: make borrowing pricier, slow down spending, and cool off the economy.

But now, things are flipping. As inflation chills out, the bank is looking to cut rates to spark some growth. Ali Salarian is calling for a 50 basis point cut right now. He’s worried that without a bold move, we might slide back into deflation and recession.

As we wait for October 23, it’s all about seeing how the Bank of Canada will roll with these latest numbers. Will they play it safe, or go for a big cut? Stay tuned—we’ll keep you posted with all the latest!

If you have any questions about Canada’s inflation rate, contact us today!

Call: 905-209-7400 ext. 102

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