Canada’s upcoming inflation release will provide a pivotal snapshot for the Bank of Canada (BoC) as it weighs its policy path. On Tuesday, Statistics Canada is set to publish the Consumer Price Index (CPI) for September, offering fresh insight into price dynamics and underlying inflation trends.
Economists are forecasting a 2.3 % year-on-year rise in the headline CPI for September, up from 1.9 % in August. On a monthly basis they expect a modest drop of 0.1 %, mirroring the prior month’s contraction. The core inflation gauges—such as CPI-trim, CPI-median and CPI-common, which exclude volatile food and energy components — remain under close watch. In August, the BoC’s preferred core measure stood at about 2.6 % annually. Additional measures like the trimmed and median still hover near 3 %, signalling persistent underlying price pressure.
These figures arrive just ahead of the BoC’s scheduled meeting on October 29, where markets widely expect the Bank to cut its benchmark policy rate by 25 basis points to 2.25 %. However, that move is not assured. If the inflation print surprises to the upside — for example, showing an uptick in core measures or reflecting trade-tariff cost pass-through — it may force the Bank to adopt a more cautious stance.
In that scenario, the Canadian dollar (CAD) could strengthen, reflecting an expectation that the BoC will delay easing. Traders are already focused on the USD/CAD pair — resistance around 1.4080 has been highlighted, while support zones near 1.3960 and lower are closely watched in technical terms.
For the BoC, the risk is clear: elevated core inflation combined with external cost pressures (like U.S. tariffs) may limit room for cuts. The Bank emphasises it will act “one meeting at a time” and remains ready to respond if inflation risks increase. The upcoming CPI release is thus a critical test of whether inflation is truly moderating or whether underlying pressures remain intact.
