- Inflation exceeded the Bank of Canada s control range for a sixth straight month, worsened by supply chain bottlenecks that are stubbornly persistent.
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The consumer price index rose 4.4% in September from a year earlier, Statistics Canada reported on Wednesday in Ottawa. That is the highest reading since February 2003, exceeding consensus expectations in a Bloomberg survey of economists for a reading of 4.3%.
The average of the central bank's core measures - often seen as a better gauge of underlying price pressures - ticked up to 2.67% from 2.6% in August.
The hot inflation readings of the last six months are deepening a communications challenge for policy makers led by Governor Tiff Macklem, who maintain the spike in consumer-price gains will be short lived. The data also come as traders in the overnight swaps market bet increasingly against the Bank of Canada s guidance that policymakers won t raise interest rates until the second half of next year.
Macklem changed his tone on inflation in recent weeks. He acknowledged on Oct. 7 that supply chain disruptions are dragging on and said last week that high inflation readings could take a little longer to come back down. The Wednesday report is the last major indicator before the central bank s Oct. 27 policy decision. It s not expected to change rates but Macklem is likely to reduce weekly purchases of Canadian government bonds to C $1 billion $810 million from the current pace of C $2 billion.
Before the September inflation report, traders had priced in three interest rate hikes in Canada by the end of 2022, which would bring the policy rate to 1% from the current 0.25%.
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