Canada's inflation rate has returned to the country's target range after a tumultuous couple of years of soaring prices. Statistics Canada reported on Tuesday that inflation fell to 2.8 per cent in June.
Bank of Canada Governor Tiff Macklem holds a press conference at the Bank of Canada in Ottawa on Wednesday, July 12, 2023. Canada's inflation rate has returned to the country's target range after a tumultuous couple of years of soaring prices., down significantly from the eye-popping peak of 8.1 per cent reached last summer.
Given the progress made so far, the Bank of Canada's hawkishness might seem confusing: why raise interest rates even more when inflation has fallen so significantly? New projections from the Bank of Canada suggest the steady progress made on inflation over the last year will stall. The central bank now expects Canada's inflation rate to hover around three per cent over the next year, before falling to two per cent by mid-2025.The Bank of Canada justified its last rate hike in part by pointing to this new projection, which also signals that interest rates are likely to stay higher for longer.
The Bank of Canada's two preferred core measures of inflation that it tracks closely also show inflation hasn't eased as much as it might appear, hovering at 3.7 and 3.9 per cent last month.
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