Senior economist and vice president of economics at BMO, Priscilla Thiagamoorthy, said the Bank of Canada’s policy rate will remain elevated for a while.

The consumer price index came in at 2.8% annually:

The lowest year-over-year level since march 2021

Thiagamoorthy noted that headline inflation is making significant strides, but core inflation is more persistent. This highlights the challenge the Bank of Canada is facing in its fight to restore price stability.

Conference Board of Canada member Pedro Antunes said that the BoC will refrain from increases beyond 5% but a cut is not likely due to core inflation.

Antunes said that the BoC could be keeping interest rates high to convince Canadians that inflation will end up decreasing to the 2% rate.

BMO made note of food becoming another element that might contribute to the inflation-interest rate dynamic. The bank said that there might be some decrease in food inflation, but we can expect a rather high rate for the foreseeable future.