This morningâ€™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 Canadaâ€™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 Bankâ€™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 Canadaâ€™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