{"id":187282,"date":"2025-10-03T11:27:12","date_gmt":"2025-10-03T11:27:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/187282\/"},"modified":"2025-10-03T11:27:12","modified_gmt":"2025-10-03T11:27:12","slug":"bank-of-canada-considers-changes-to-core-inflation-measures","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/187282\/","title":{"rendered":"Bank of Canada considers changes to core inflation measures"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

The Bank of Canada building in Ottawa. Deputy governor Rhys Mendes says inflation is becoming more volatile with swings in U.S. trade policy, structural changes and geopolitical conflict.Adrian Wyld\/The Canadian Press<\/p>\n

The Bank of Canada<\/a> is considering changes to how it measures preferred inflation metrics to give it a better idea of how external shocks are affecting the economy, a senior official said on Thursday.<\/p>\n

Deputy governor Rhys Mendes said inflation was becoming more volatile given swings in U.S. trade policy, structural changes and rising geopolitical conflict.<\/p>\n

\u201cSo we need to think about how we assess \u2013 and talk about \u2013 underlying inflation as we confront this new reality,\u201d he said.<\/p>\n

The study into whether officials can do a better job of measuring underlying inflation will be part of a scheduled five-year view of the central bank\u2019s mandate with the government.<\/p>\n

Economy grows by more than expected in July after three monthly declines<\/a><\/p>\n

Bank of Canada will not review 2% inflation target in 2026, Macklem says<\/a><\/p>\n

The framework is up for renewal next year and the BoC has already confirmed that its mandate of keeping overall inflation at 2 per cent will not be touched.<\/p>\n

The bank has two preferred measures of core inflation which strip out the prices of more volatile items and are designed to give a more accurate idea of underlying pressures.<\/p>\n

CPI-median takes into account the central components of the Consumer Price Index basket while CPI-trim excludes the most extreme price changes.<\/p>\n

\u201cWe\u2019re asking ourselves if there are ways we could improve our existing measures of core inflation,\u201d Mr. Mendes said, noting that every measure \u2013 no matter how well-designed \u2013 would at times send misleading signals.<\/p>\n

One option under review is the so-called multivariate core trend inflation, a method that isolates the persistent part of inflation and then splits it into two categories.<\/p>\n

The bank\u2019s existing measures made it hard to judge how movements in mortgage-interest costs affected inflation, he said.<\/p>\n

\u201cOne question we are asking … is whether we should revise our preferred measures and our alternative measures of core inflation so they all pre-exclude mortgage-interest costs. It\u2019s something we\u2019re considering carefully,\u201d he said.<\/p>\n

The bank is also mulling the use of artificial-intelligence tools to measure core inflation, Mr. Mendes said, questioning whether it should continue to use the word \u201cpreferred\u201d when talking about core measures as it could give misleading signals.<\/p>\n

Mr. Mendes reiterated that most measures of inflation show that underlying inflation is around 2.5 per cent.<\/p>\n

This was one of the factors that helped persuade the bank to cut rates last month to 2.5 per cent, its first reduction in six months.<\/p>\n

\u201cWhen we looked ahead, we saw reasons to believe that underlying inflation would ease,\u201d Mr. Mendes said.<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: The Bank of Canada building in Ottawa. Deputy governor Rhys Mendes says inflation…\n","protected":false},"author":2,"featured_media":187283,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[901,888,902,879,877,903,45,49,48,876,895,896,891,878,875,46,549,295,894,887,914,880,881,893,889,890,884,904,885,909,910,912,907,911,905,908,882,898,899,714,897,906,865,61,900,892,886,883,913],"class_list":["post-187282","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-alberta","tag-arts-news","tag-bc","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","tag-business","tag-ca","tag-canada","tag-canada-news","tag-canada-sports","tag-canada-sports-news","tag-canada-trafficcanada-weather","tag-canadian-breaking-news","tag-canadian-news","tag-economy","tag-education","tag-environment","tag-federal-government","tag-foreign-news","tag-globe-and-mail","tag-globe-and-mail-breaking-news","tag-globe-and-mail-canada-news","tag-government","tag-life-news","tag-lifestyle","tag-local-news","tag-manitoba","tag-national-news","tag-new-brunswick","tag-newfoundland-and-labrador","tag-northwest-territories","tag-nova-scotia","tag-nunavut","tag-ontario","tag-pei","tag-photos","tag-political-news","tag-political-opinion","tag-politics","tag-politics-news","tag-quebec","tag-sports-news","tag-technology","tag-travel","tag-trudeau","tag-us-news","tag-world-news","tag-yukon"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/187282","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=187282"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/187282\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/187283"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=187282"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=187282"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=187282"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}