Canada’s annual inflation rate slowed to 1.7% in April, down from 2.3% in March and slightly above economist forecasts of 1.6%. The deceleration marks the softest reading in three years, reinforcing expectations that the Bank of Canada could move toward interest rate cuts in the coming months.
The moderation was broad-based, with easing price pressures seen across key categories including food, transportation, and housing. However, persistent stickiness in services inflation—which remained elevated at 4.4% year-over-year—suggests underlying price pressures have not fully subsided.
Economists note the data supports the central bank’s cautious stance, as inflation moves closer to the 2% target. Markets are now pricing in a 60% chance of a rate cut by July, with further reductions expected later in the year if the disinflation trend holds. The Canadian dollar weakened slightly following the release as traders adjusted bets on monetary policy easing.
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