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In July, Canada's annual inflation rate speeded up to 3% from June’s outcome of 2.5% because energy prices rallied, driving hopes that the Bank of Canada might have interest rates lifted already in September.
The inflation rate turned out to be much stronger than the 2.5% estimate by experts in a Reuters survey. The country’s key bank that lifted interest rates for the fourth time in a year in July has an inflation objective of 2%.
It naturally increases the probability of an upward move in September by Canada’s key financial institution. However, it’s believed that another evidence of the strengthening economy and rising inflation will show up soon.
Chances of another rate lift in September tacked on to about 30% from less than 20% yesterday. That’s what the overnight index swaps market uncovered.
Additionally, energy prices turned out to be the number one contributor to the higher inflation rate in the country. The given fact could provide the major financial institution of Canada with the flexibility to be quite patient.
A number of market experts pointed out that the very fact that was powered by one-offs appears to be something that Canada’s main financial institution can look through, going ahead.
Energy prices managed to tack on by 14.2% from July the previous year. This reading has turned out to be higher than the year-on-year 12.4% ascend in June, underpinned by a 25.4% rally in gasoline prices. By the way, in July, all eight key components inched up on a year-over-year basis.
As for the basic inflation measures, CPI trim, excluding downside and upside outliers, inched up to 2.1% from June’s reading of 2%.
Besides this, the CPI median amounted to about 2%, while the CPI common hit up to 1.9%.
The Canadian dollar has chances to keep trading at good levels. According to the recent statement of the Bank of Canada, the country’s economic data are in line with the forecasts.
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