Interest rates unlikely to rise as inflation dips...

Canada’s annual rate of inflation softened in August, casting more doubt on the need for the Bank of Canada to raise interest rates next month.

Statistics Canada said Tuesday that inflation edged down to 1.7 per cent from 1.8 per cent in July, when the new harmonized sales tax caused a spike in prices in Ontario and British Columbia.

On a monthly basis, prices fell 0.1 percentage points from July.

“Overall inflation continues to track on the soft side, leaving room for the Bank of Canada to take a pause on rate hikes for a while,” Avery Shenfeld, chief economist at CIBC World Markets, wrote in a research note.

“If as we expect, the upcoming employment report is also unimpressive, the Bank of Canada will take a pass on a hike in October.”

Source: TheStar.com
Madhavi Acharya-Tom Yew, Business Reporter
Published On Tue Sep 21 2010

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