Bank of Canada: Inflation Report Shows No Sign of Stopping Fed from Cutting Interest Rates Again

Jinshi data, November 13th, Canadian Royal Bank analyst Nathan Janzen said that the CPI increase in October was generally in line with market expectations, which should not prevent the Fed from cutting interest rates again in December. Janzen pointed out that the Fed still relies heavily on data, and there will be a month of inflation and labor market data to be released before the next policy decision. However, his basic prediction is that the Fed will cut interest rates by 25 basis points in December, then cut interest rates by another 25 basis points in January next year, and then suspend interest rate cuts for the remaining time in 2025. Janzen stated that the inflation rate has slowed down compared to earlier this year, and the labor market is gradually softening. This indicates that even though the U.S. economy is resilient, the government's huge budget deficit has an impact on inflation. However, to make prices return to the Fed's 2% target level comprehensively and sustainably, the current interest rate is still higher than required level.