Downside risks to Canadian inflation put central bank in a quandary

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The latest Bank of Canada monetary policy report summary, released along with its decision to hold rates steady yesterday, said upside and downside inflation risks remain finely balanced – meaning the "timing and direction of the next change to the policy rate" will depend on new information.

Inflation has fallen below the 2% target, "owing largely to significant excess supply in the economy and heightened competition in the retail sector". The inflation outlook, the report says, "is subject to

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