Canada's annual inflation rate eased to 1.7% in July from 1.9% in the prior month as lower year-on-year gasoline prices kept the consumer price index low, data showed on Tuesday.

Under that scenario, headline inflation would stay below 2% until late 2026. The Bank of Canada sets interest rates to achieve and maintain 2% inflation. “The removal of retaliatory tariffs on many products should help quell any lingering concerns at the Bank of Canada about tariff-induced inflation,” Mendes said.