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TORONTO, Jan 21 (Reuters) - Canada's annual inflation rate decreased to less than expected, according to Statistics Canada on Tuesday, dropping slightly to 1.9%, below the previous month's 1.9%.

Market reaction:

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COMMENTARY

DOUG PORTER, CHIEF ECONOMIST, BMO CAPITAL MARKETS

"It was a very interesting month, with many moving parts, notably the end-of-month cut in the GST and HST in some provinces. Despite the complexities, this month's outcome aligned closely with expectations."

"Looking beyond the GST adjustments, the core measures did show some moderation, particularly in the Bank of Canada's two main core measures."

"The prevailing economic uncertainty, coupled with ongoing moderation in inflation, presents an opportunity for the Bank of Canada to consider further rate cuts."

"Core inflation pressures suggest that underlying inflation trends are pushing against the Bank of Canada's 2% target."

"While the market expects a quarter-point cut, I believe the Bank of Canada should consider other factors, such as robust job growth, warm core inflation, solid fourth-quarter growth, and increased consumption, before rushing into a decision, especially amid uncertain tariff impacts on future inflation."

"Overall, amidst various temporary factors impacting current inflation data, underlying inflationary pressures appear to be nearing 2%, leading us to anticipate a 25 basis point interest rate reduction from the Bank of Canada next week."