The July CPI print released in late August showed key metrics for inflation falling closer to the BoC’s two per cent target rate. Moreover, as other inflation metrics have come down shelter inflation has become a larger piece of overall Canadian CPI. A cut in rates, therefore, may have the additional effect of curbing that aspect of inflation.
Q2 GDP growth numbers, released at the end of August, actually surprised to the upside. GDP grew by more than expected, following similarly slow — but positive — growth in Q1. While those numbers are very low and represent extremely sluggish growth, there is some sign that Canada may have negotiated a ‘soft landing.’
“Governing Council is carefully assessing these opposing forces on inflation. Monetary policy decisions will be guided by incoming information and our assessment of their implications for the inflation outlook. The Bank remains resolute in its commitment to restoring price stability for Canadians,” the release reads.