Low Inflation Means No More Interest Hikes ?

in Bank of Canada, Inflation, Stats Canada

It would be imprudent to assume that low inflation, will mean no more interest hikes. The Bank of Canada has wanted to lower interest rate stimulation, and they will continue with this policy. They may slow down their rate plan but rates are going up.

Stats Canada on Friday published the monthly inflation report. The report overall shows that inflation is running at 1.0%, but as usual those numbers are deceiving. The detailed report shows a better view on things.

Main upward contributors:

  • Homeowners’ replacement cost (+4.1%)
  • Food purchased from restaurants (+2.5%)
  • Travel tours (+7.0%)
  • Traveller accommodation (+7.1%)
  • Natural gas (+10.0%)

Main downward contributors:

  • Electricity (-5.3%)
  • Gasoline (-1.4%)
  • Women’s clothing (-2.5%)
  • Men’s clothing (-2.9%)
  • Household appliances (-3.3%)

I am glad to see groceries specific are not mentioned here, but food purchased from restaurants took a bump. The generic graphic gives you a better overall view though.

Inflation by Category

Inflation by Category for June 2017

B of C Final Words on the Economy

The Bank of Canada has the following view on the Canadian Economy.


Growth in the Canadian economy is projected to reach 2.8 per cent this year before slowing to 2.0 per cent next year and 1.6 per cent in 2019.

That seems to be a very modest view on things, however, it all depends on what happens down south. Is it safe ? I have no idea.

2017 Inflation Discussion

Reports on inflation in 2017 so far.



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