Canada's Inflation Eases In October, Likely Closing The Door On More Rate Hikes

• Canada's annual inflation rate decreased more than anticipated to 3.1% in October, down from 3.8% in September, with core inflation measures also dropping to their lowest levels in about two years.
• The lower-than-expected inflation figures are likely to reduce the likelihood of further interest rate hikes by the Bank of Canada (BoC). Analysts suggest that the central bank may consider lowering its key policy rate from the current 22-year high of 5.00%, possibly in the first half of 2024.
• However, the Canadian economy faces challenges such as a potential shallow recession, slack in the labour market, and elevated inflation. Furthermore, the government, led by Prime Minister Justin Trudeau, is under pressure to address affordability issues without exacerbating inflation, as reflected in the Finance Minister's planned fiscal update, which is expected to show widening deficits and weak economic growth.

(Source: Reuters)