Canada's cooling June inflation makes rate cut next week increasingly likely
June CPI beat forecast to cool down to 2.7%
Markets see 93% chance of rate cut next week
CPI deceleration led by drop in gas prices
Adds economist comments, context
By Promit Mukherjee and Ismail Shakil
OTTAWA, July 16 (Reuters) - Canada's slower-than-expected rise in consumer prices in June has firmed up expectations that yet another rate cut by the Bank of Canada is coming next week, extending some more relief to home owners and indebted businesses.
The annualinflation rate cooled a tick more than expected to 2.7% in June and the BoC's closely tracked core inflation measures were also marginally down, data showed on Tuesday.
Analysts polled by Reuters had forecast the inflation rate would come down to 2.8% from 2.9% in May.
The inflation reading is the last critical data point before the central bank's interest rate announcement and Tuesday's print prompted analysts and economists to factor in with almost complete certainty another 25 basis point rate cut on July 24.
"The inflation data for June gave the Bank of Canada what it needed in order to cut interest rates at next week's meeting," Katherine Judge, senior economist at CIBC Capital Markets, wrote in a note.
Royce Mendes, head of macro strategy at Desjardins Group, said the latest data "build a strong case for continuing the rate cutting cycle without delay."
Financial markets advanced their bets for a rate cut at the central bank's July 24 rate announcement to almost 93% from 82% beforethe data was released.0#BOCWATCH
Month-over-month, the consumer price index was down 0.1%, compared with a forecast for no change. This was the first deceleration in the monthly inflation rate since December, Statistics Canada data showed.
Tuesday's data showed that headline inflation was cooler than the BoC's 2.9% inflation forecast for the end of the first half of 2024.
CPI has stayed below 3%since the start of the year and has been in the target range of the central bank, which aims to keep inflation at the mid-point of its range.
Last month, the bank became the first central bank amongst the G7 nations totrim borrowing costs, cutting them by25 basis points after holding it at a more than two-decade high for about a year.
Since then, lackluster GDP numbers for April and rising unemployment in June had been signs that the economy is under strain and more cuts were needed to prevent a recession.
Business bankruptcies have been rising, many auto loans have turned delinquent, and people are defaulting on credit card debts.
A survey of businesses by the BoC on Monday revealed that firms are not inclined to invest in expansion or machinery as they anticipate demand to stay subdued over the next year.
"Today's CPI report, taken with the weak Q2 Business Outlook Survey, the ongoing march higher in the jobless rate, and increased economic slack are expected to provide policymakers with enough confidence... to ease policy rates 25 bps to 4.5% on July 24," said Benjamin Reitzes, Managing Director, at BMO Capital Markets.
The Canadian dollar CAD= shed gains after the data with the loonie trading down 0.07%to 1.3691 against the U.S. dollar, or 73.04 U.S. cents.
Canada's main stock index .GSPTSE opened higher by 0.26% to 22,810.07 points, boosted by rate cut hopes.
Yields on the government's two-year bonds CA2YT=RR were down 0.9 basis points to 3.792%.
The average of two of the Bank of Canada's preferred measures of core inflation- CPI-median and CPI-trim - eased slightly to 2.75% in June from 2.80% in May.
The deceleration in headline inflation was largely attributable to a slowdown in gasoline prices, which rose at an annual rate of 0.4% in June, down from 5.6% in May. Excluding gas prices, the CPI rose 2.8% on an annual basis, Statscan said.
An increasein prices for food purchased from stores as well as a smaller decline for cellular services in June offset somecooling in prices.
Excluding food and energy, prices rose 2.9% in June, the sameas in May.
Service prices increased 4.8% annually in June, compared with a 4.6% rise in May, while goods inflation slowed to 0.3% from 1%.
Canada's inflation has been below 3% since the start of the year Canada's inflation has been below 3% since the start of the year https://reut.rs/4bFY5sp
Reporting by Ismail Shakil and Promit Mukherjee; Editing by Chizu Nomiyama
免責聲明: XM Group提供線上交易平台的登入和執行服務，允許個人查看和/或使用網站所提供的內容，但不進行任何更改或擴展其服務和訪問權限，並受以下條款與條例約束：（i）條款與條例；（ii）風險提示；（iii）完全免責聲明。網站內部所提供的所有資訊，僅限於一般資訊用途。請注意，我們所有的線上交易平台內容並不構成，也不被視為進入金融市場交易的邀約或邀請 。金融市場交易會對您的投資帶來重大風險。
所有缐上交易平台所發佈的資料，僅適用於教育/資訊類用途，不包含也不應被視爲適用於金融、投資稅或交易相關諮詢和建議，或是交易價格紀錄，或是任何金融商品或非應邀途徑的金融相關優惠的交易邀約或邀請。
本網站的所有XM和第三方所提供的内容，包括意見、新聞、研究、分析、價格其他資訊和第三方網站鏈接，皆爲‘按原狀’，並作爲一般市場評論所提供，而非投資建議。請理解和接受，所有被歸類為投資研究範圍的相關内容，並非爲了促進投資研究獨立性，而根據法律要求所編寫，而是被視爲符合營銷傳播相關法律與法規所編寫的内容。請確保您已詳讀並完全理解我們的非獨立投資研究提示和風險提示資訊，相關詳情請點擊 這裡查看。
