Inflation down to 2%, hitting BoC's target

Economists say central bank should get more aggressive on rate cuts

- JOSH RUBIN

Canada's annual rate of inflation fell to two per cent in August, its lowest rate in more than three years, and spot-on the Bank of Canada's official target.

The biggest question? Whether the drop is significant enough to push the Bank into a half-percentage-point rate cut at its next meeting in October.

The annual rate of inflation as measured by the Consumer Price Index fell to two per cent last month, down from 2.5 per cent in July, Statistics Canada announced Tuesday.

In a research note after the numbers were released, TD senior economist James Orlando called it a "bullseye."

"Bullseye! Headline inflation is back at the Bank of Canada's two per cent target. At the same time, core measures keep grinding lower," Orlando wrote.

"The bottom line is that inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate," CIBC economist Andrew Grantham wrote in a research note after the results were released.