Slowdown in inflation supports interest rate pause next week, economists say

Statistics Canada released its latest consumer price index report on Tuesday, which showed inflation slowing once more in September after rising to four per cent in August.The federal agency said grocery prices were up 5.8 per cent year-over-year in September compared with 6.9 per cent in August.

"I think the Bank of Canada will smile a little bit after this report. It takes the pressure off them heading into next week's meeting, and they should very much be on hold when they make their decision," said Benjamin Reitzes, BMO's managing director of Canadian rates and macro strategist.

Since last year, economic growth has slowed significantly and the labour market is not longer as hot as it was coming out of COVID-19 lockdowns.

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