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2025-09-16 21:57:46
[Inflation Curve Slightly Rises, Central Bank Decision Uncertain] ⑴ Canada's annualized inflation rate rose to 1.9% in August, up from 1.7% in July and slightly below economists' expectations of 2%. "However, this figure has remained below the Bank of Canada's target range for five consecutive months." Rising oil prices were the primary driver of the inflation rebound. Excluding oil prices, the annualized core inflation rate fell to 2.4%, compared to 2.5% for the previous three months. "In addition, the Bank of Canada's preferred core inflation measure (the average of the CPI trim and CPI median) fell slightly to 3.05%, down from 3.1% in the previous month." ⑵ Despite the rebound in August inflation data, the Bank of Canada is unlikely to make significant monetary policy adjustments at its interest rate meeting on Wednesday. Analysts point out that the marginal decline in core inflation and the continued below-target performance of overall inflation provide the central bank with reason to "ignore" recent oil price fluctuations and maintain interest rates unchanged. The market generally expects the Bank of Canada to pause its rate hikes and potentially signal a dovish tone, shifting focus to potential future rate cuts. ⑶ From a trading perspective, market participants have converged on a dovish stance regarding the central bank's policy. Small changes in the data, such as a moderation in core inflation, could have a greater impact on its decision-making. If the central bank shows a more dovish stance at this meeting, it could trigger short-term fluctuations in the Canadian dollar, but the long-term trend will still depend on the evolution of overall economic fundamentals and the global macroeconomic environment.
