The Bank of Canada has lowered its outlook on Canadian inflation and economic growth over the course of the next two years as higher interest rates and weaker demand are expected to ease cost pressures.
The Bank of Canada now projects the Canadian consumer price index to come to an average of 4.1 per cent in 2023, down from a prior forecast of 4.6 per cent. Inflation is expected to continue declining in 2024 to 2.2 per cent, slightly lower than the 2.3 per cent the central bank previously forecast in its July Monetary Policy Report.
Statistics Canada said Canada's inflation rate in September was 6.9 per cent, edging down from seven per cent in August. Canada's CPI is expected to come to an average of 6.9 per cent this year, down from earlier forecasts of 7.2 per cent. "These forces are expected to pass through to lower food and goods price inflation in the months ahead," the Bank of Canada said.
The Bank of Canada broke down several components of how it calculates inflation expectations and sees"other factors" -- defined as those which are forces that are underestimated or previously unobserved, such as the pass-through of commodity price moves -- as contributing significantly to inflation over the next year. Those"other factors" are expected to not contribute to the Bank of Canada's inflation outlook in 2024.
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