Canada’s Inflation Eases, June Rate Cut More Likely

Canada’s inflation rate dropped to its lowest since June last month, catching analysts off guard and sparking increased speculation about a possible interest rate cut in June 2024.

The annual inflation rate fell to 2.8% in February, below the 3.1% analysts had expected. Meanwhile, the consumer price index (CPI) rose by only 0.3% from the previous month, also under expectations. This weaker inflation data has led investors to believe there’s more than a 75% chance of a rate cut in June, and it also pushed the Canadian dollar to its lowest level in three months against the U.S. dollar.

Lower food prices in stores and reduced costs for cellular plans and internet services contributed to the inflation slowdown. However, some analysts are concerned that waiting until June to cut rates could hurt the economy.

The Bank of Canada’s main inflation measures also hit their lowest levels in over two years, suggesting there might be room for a rate cut soon.

For more information, read the full article on Reuters.