The September CPI report was published last Friday, and the disinflationary trend of the last few months hasn't yet stopped:
As I noted at the last interest rate announcement,
- Up until the crash in commodity prices, Canada ran a current account surplus, so an appreciating currency made sense. But now that we're running a current account deficit, it doesn't.
- The last time the CAD hit parity with the USD, we saw a sharp drop in consumer prices; even the most arithmetically-challenged Canadian consumers revolted when they could see that they were paying higher prices than were being charged in the US. Consumer prices are already below the path that the Bank would like to see.
If we weren't already at the lower bound, I think that we would have expected the Bank to cut interest rates today. I can think of several reasons why the Bank would want to engineer a temporary depreciation in the CAD, and I can't think of a really good reason why it shouldn't.