Inflation holds near the Bank of Canada’s target

by Ephraim Vecina on 02 Feb 2018
Canadian inflation hovered at about the central bank’s 2% target for a second month in December, the result of a year of strong growth that is finally beginning to produce signs of more normal price pressures.

Annual inflation was 1.9% in December, slightly down from 2.1% in November, Statistics Canada reported late last week in Ottawa. It marked only the second time in the past three years the economy has produced two-month inflation averaging at least 2%.

The price strength reflected an economy running up against capacity constraints following a stellar performance in 2017. That is adding pressure on the Bank of Canada – which has kept the expansion going with low interest rates – to keep hiking borrowing costs to more normal levels.

“This is firm enough to keep the Bank in tightening mode, but still mild enough to keep the tightening pace gradual and cautious,” Bank of Montreal chief economist Doug Porter said in a note, as quoted by Bloomberg.

Read more: Although cautious, BoC’s rate hikes will still incite ripples – DLC’s Cooper

Investors are anticipating at least two more increases this year, after the Bank of Canada hiked borrowing costs three times since July.
The pick-up at the end of 2017 brought average inflation for the year to 1.6%, which was stronger than 1.4% in 2016 and 1.1% in 2015. The Bank of Canada is expecting that inflation will stay at about 2% on average over the next two years – in line with an economy around full capacity.

The average of the Bank of Canada’s three key core inflation measures – which excludes volatile items such as energy and is considered a gauge of inflation pressures – rose to 1.8% in December, the highest since October 2016.

Post a Comment

Most Trending News

The best place to buy a rental property in Canada: 2021

You want the biggest bang for your buck so here are the best places in Canada to buy a rental property, and the best types of properties (including vacation homes!).

Read More
Strategies to Predictably, Reliably Grow Your Real Estate Business

This 7-day free masters summit will provide you with all the tips and tricks you need to get started in real estate investing, how to expand your real estate portfolio, and much more.

Read More
June virtual conference promises to turn agents into millionaires

“The easiest way to prove to people you can help them is to just start helping them, no strings attached,” said Craig Proctor, the master realtor who revolutionized the team concept.

Read More