Core price measures ease to 40month lows in August
Consumer prices fall on a monthly basis
Cost of rent rises 8.9 from 8.5 in July

OTTAWA, Sept 17 Reuters Canada39;s annual inflation rate reached the central bank39;s 2 target in August, data showed on Tuesday, fuelling hopes for a 50basispoint interest rate cut by the country39;s central bank next month.

The consumer price index posted its smallest rate of increase since February 2021 and the closely watched core price measures also cooled to their lowest levels in 40 months, Statistics Canada said.

Consumer prices fell 0.2 on a monthonmonth basis, it said.

We expect central bankers to slash their policy rate by 50 basis points next month in an effort to expedite the return to a more neutral setting, Royce Mendes, head of macro strategy at Desjardins Group, wrote in a report.

A neutral setting is when the policy rate is around the socalled neutral rate of interest, which is between 2.25 and 3.25 in Canada, a range where interest rates are neither restricting nor stimulating growth.

Analysts polled by Reuters had forecast the consumer price index CPI would cool to 2.1 from 2.5 in July on an annual basis, and expected it to be unchanged on a monthly basis.

At the Bank of Canada39;s monetary policy decision announcement earlier this month, Governor Tiff Macklem said the central bank had to increasingly guard against the risk that inflation could fall below its target as economic growth was weak.

Economic growth…