2.5% inflation means Bank of Canada's interest rate hikes should end now — via financialpost
In May, if the mortgage interest cost index is removed, the year-over-year CPI is 2.5 per cent, very close to the target inflation rate. I repeat: the CPI excluding mortgage interest is 2.5 per cent. One year ago, this all-in CPI rate was 7.7 per cent. It has declined by 5.2 percentage points in one year.
I know that it isn’t that simple. You can slice and dice inflation a number of different ways, and if you focus on expected salary increases or food prices, one can make a case that higher interest rates are required to slay the inflation beast.All these factors are included in the 2.5-per-cent CPI number. The only item removed is the one that you know will go up if the Bank of Canada raises rates further.
The Bank of Canada justified its June rate hike in part by pointing to the slight rise in the CPI in April to 4.4 per cent from 4.3 per cent.
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