Higher-than-expected inflation in September will not prevent the Bank of Canada from introducing another interest-rate cut next week, say leading economists.

Statistics Canada reported Tuesday that the Consumer Price Index rose 2.4% year-over-year in September, higher than a projected 2.2% increase. But economists note that inflation remains within the BoC’s target range and contend that the central bank’s concerns about the impact of U.S. tariffs on the economy and other factors will prompt a rate cut.

“One hotter-than-expected month does not a new trend make, but it is worth monitoring whether the strength in price pressures is indicative of ongoing consumer resilience,” wrote Andrew Hencic, TD Economics director and senior economist, in a research note provided to this writer.

“The Bank of Canada should still have room to deliver another cut.”

The Canadian economic outlook is “fraught with risks” and elevated unemployment reflects an economy with “ample slack,” he added.

Such other leading economists as Royce Mendes of Desjardins Securities and Andrew Grantham of CIBC Capital Markets, expressed similar views in client notes, The Globe and Mail reported.

The Boc cut its key overnight lending rate by 25 basis points to 2.5% in September, with Macklem stressing that considerable uncertainty remains prevalent. That marked the first cut following a three straight holds since March.

Macklem recently lamented the economy’s mediocre performance, noting that growth was occurring but it was not significant.

According to StatCan, higher grocery prices and rents, among other expenses, drove inflation upward in September. Citing its own data, Bloomberg reported that investors have priced in a 66% chance of a rate cut, down from the 75% level priced before StatCan issued its report.

The BoC will announce its next rate decision on October 29.

Pictured: Bank of Canada Governor Tiff Macklem

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