Canada's Cooling June Inflation Makes Rate Cut Next Week Increasingly Likely

• Canada's slower-than-expected rise in consumer prices in June has firmed up expectations that yet another rate cut by the Bank of Canada (BoC) is coming next week, extending some more relief to homeowners and indebted businesses.
• The annual inflation rate cooled a tick more than expected to 2.7% in June and the BoC's closely tracked core inflation measures were also marginally down, data showed on Tuesday.
• The inflation reading is the last critical data point before the central bank's interest rate announcement and Tuesday's print prompted analysts and economists to factor in with almost complete certainty another 25-basis point rate cut on July 24.
• Month-over-month, the consumer price index was down 0.1%, compared with a forecast for no change. This was the first deceleration in the monthly inflation rate since December, Statistics Canada data showed.
• CPI has stayed below 3% since the start of the year and has been in the target range of the central bank, which aims to keep inflation at the mid-point of its range. The average of two of the BoC's preferred measures of core inflation - CPI-median and CPI-trim - eased slightly to 2.75% in June from 2.80% in May.
• Canada's main stock index (the S&P/TSX Composite) opened higher by 0.26% to 22,810.07 points, boosted by rate cut hopes. Meanwhile, yields on the government's two-year bonds were down 0.9 basis points to 3.792%.

(Source: Bloomberg News)