The path of inflation will influence looming decisions by the monetary authorities about how high to lift interest rates. The year-over-year increase in the CPI eased to 8.3% in August from 9.1% in June and 8.5% in July, but not as much as economists had expected. They were banking on 8.1%. Put simply, broadening price pressures caused disappointment as the cost for rent, health care and restaurant meals accelerated. Another 75 basis point increase in the policy rate is therefore in the bag. The monetary authorities will not back off until they reach satisfaction. Indeed, why would they? The economy is still expanding. The NYT’s Ben Casselman and Lauren Leatherby evaluated 14 key economic indicators and found that most pointed to a good economy, weakness seemingly concentrated only in the residential and auto sectors.
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By Hubert Marleau
By Hubert Marleau