According to the Golden Ten report, data showed that Canada’s annual CPI rate fell to 2.9% in January, far lower than expected. The main reason was the drop in natural gas prices, while the annual core CPI rate also dropped to the lowest level in more than two years. The Bank of Canada has previously said that a single data point is not enough to influence its policy decision, but cooling prices may indeed accelerate discussions about cutting interest rates. The Bank of Canada expects overall inflation to remain around 3% in the first half of 2024, before falling to 2.5% by the end of this year. The Bank of Canada kept its benchmark overnight interest rate unchanged at 5% in January and said that while underlying inflation remained a concern, its focus was turning to when to cut borrowing costs rather than whether to raise rates again.

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