Canada Inflation Slows to 2.1%, Lowest Since January 2021

Core inflation, which strips out volatile food and energy, moderated. The Bank of Canada's preferred core measures averaged 2.35%, down from 2.6% in May and the lowest since February 2021.

The data strengthens the case for the Bank of Canada to cut its policy rate at the July 24 meeting, several traders said. Money markets had priced in roughly a 45% probability of a quarter-point cut before the release. After the print, the odds moved closer to 55%, one Toronto-based fixed-income trader said.

A cut would bring the overnight rate to 4.50% from 4.75%. Governor Tiff Macklem said in June the Bank would take decisions meeting by meeting. The next rate announcement is scheduled for July 24.