Consumer Price Index (Dec.)

The surprising drop in December's official core inflation rate to 1.1%, from 1.2% in November, suggests that there is much more slack in the economy than most economists previously thought. With sub-par economic growth forecast ahead, disinflationary pressures are only going to get more intense, with underlying inflation possibly falling below the Bank's 1% to 3% target range. This is more evidence that interest rates may be headed lower.