The recent slowdown in all three new core inflation measures suggest that the excess slack in the economy is building. The core CPI-common measure, which tracks the output gap most closely is of particular concern. The Bank of Canada expects above-potential GDP growth this year to close the output gap and push the core inflation rate back toward the 2% target by mid-2018. But with core inflation now dangerously low, the Bank really doesn’t have room for error.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services