This morning’s Consumer Price Index release reveals that, in March, annual inflation fell to 1.4% and annual core inflation fell to 1.3%. The fact that both rates are well below the Bank of Canada’s 2% target gives it ample room to cut interest rates next week.
Even the two highest-inflation provinces, Alberta and Saskatchewan, are no longer much above the Bank’s 1%-3% target range. Meanwhile, Ontario inflation has dropped below 1%.
For most of 2007, the spectre of inflation prevented policy makers from delivering significant economic stimulus to revitalize Canada’s slowing economy. Now that inflation cannot credibly be presented as a serious threat, there should be less resistance to calls for lower interest rates and more public investment.
UPDATE (April 18): CanWest coverage
- Niall Ferguson’s Latest Idiocy (May 5th, 2013)
- Beating Back the Ghosts: Be Gone Appeals to Reinhart and Rogoff Authority. Welcome the Triumph of Reason. (April 16th, 2013)
- Back to Balance in Nova Scotia (March 25th, 2013)
- Budget 2013: Time for a real action plan, not another ad campaign (March 19th, 2013)
- Breaking The Taboo on Monetizing Deficits (February 22nd, 2013)