Economists say inflation data gives Bank of Canada green light for rate cut

Inflation in Canada has cooled to a three-year low, prompting economists to predict that the Bank of Canada will make its first interest rate cut in June. According to Statistics Canada, the annual inflation rate dropped to 2.7 percent in April, down from 2.9 percent the previous month.

Andrew Grantham, executive director of economics at CIBC, stated that the recent data has given the green light for the Bank of Canada to start cutting rates. He believes that the central bank will make the move at its next meeting in June.

Andrew DiCapua, senior economist at the Canadian Chamber of Commerce, echoed this sentiment, saying that a rate cut in June is not only possible but is now the main consideration. Tu Nguyen, an economist with RSM Canada, described a June rate cut as a “no-brainer,” given the consistent trend of low inflation.

Despite the positive news on inflation, shelter costs continue to burden Canadians, with shelter prices rising by 6.4 percent year-over-year. Randall Bartlett, senior director of Canadian economics at Desjardins, highlighted the strain that high shelter costs and increasing gasoline prices are putting on household finances.

While some economists like Leslie Preston from TD Bank expect the rate cut to come in July, others like Olivia Cross from Capital Economics believe June is a strong possibility. The decision will depend on factors like the labor market’s resilience and further inflation data in the coming months.