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Instant reaction to weaker than expected core inflation in Canada

In the world of finance and economics, numbers can tell a powerful story. And when it comes to inflation rates, even the smallest decimal point can have a big impact. That’s why it’s crucial to turn to experts like S Gueri, Director and Senior Economist at Bimo Capital Markets, to help us digest and understand the significance of these numbers.

Recently, headline inflation in Canada came in at 2.7% in the month of April, down from 2.9% in March. Core inflation, as measured by the Bank of Canada, also saw a decrease to 2.6% from 2.8% in March. These numbers are not only in line with economists’ expectations but also bode well for Canadians and the overall economy.

According to Gueri, the downward trend in inflation is a positive sign for the Bank of Canada. The trim measure, which excludes shelter costs, is below 3%, indicating that inflation pressures are moderating. While there is still some upward pressure in the housing market, overall inflation remains relatively low.

The question on everyone’s mind is whether these numbers will prompt the Bank of Canada to cut rates on June 5th. Gueri believes that the data is leaning in favor of a rate cut, possibly in June or July. However, factors such as strong employment reports or elevated wage measures could delay the decision.

Looking ahead, Gueri predicts that Canada may reach the 2% inflation target by the middle of next year. The slow-moving nature of inflation in the housing market, particularly in the rental sector, is keeping inflation slightly elevated. While a rate cut could potentially stimulate the housing market, Gueri is less concerned about a resurgence in home prices due to a balanced demand and supply dynamic.

Overall, the direction of inflation in Canada is encouraging, and with expert analysis from professionals like S Gueri, we can better understand the implications of these numbers on the economy. As we await the Bank of Canada’s decision on interest rates, it’s clear that even the smallest decimal point can make a big difference in the world of finance.

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