Easy for Bank of Canada to Cut Rate This Week After Tuesday's "Unthreatening" CPI, Says CIBC

08:49 AM EDT, 09/16/2025 (MT Newswires) -- Inflation remained largely unthreatening in August, making the expected Bank of Canada interest rate cut on Wednesday a relatively easy decision, said CIBC.

While Tuesday's headline inflation accelerated to 1.9% year over year from 1.7% in the previous month, that was largely due to base effects and was actually slightly lower than the consensus expectation of 2.0%, noted the bank.

On a monthly basis, prices were down by 0.1% non-seasonally adjusted (NSA) with consensus for a flat reading, and up by a trend-like 0.2% after seasonal adjustment (SA). Excluding food and energy, prices rose by a modest 0.1% SA.

While the year-over-year rates of CPI-trim and CPI-median were both unchanged at around 3%, the more recent trend has been cooler, stated CIBC. After matching 0.2% month-over-month increases in August, the three-month annualized rates of both are close to 2.5%.

With core measures of inflation likely to cool further in the months ahead, thanks to the slack building up in the economy and the removal of many retaliatory tariffs against the United States on Sept. 1, CIBC not only expects a 25bps BoC cut on Wednesday but also a further reduction at the October policy meeting.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.