WRAPUP 3-Canada inflation rate slows, rate-hike bias in question

Fri Dec 21, 2012 12:14pm EST
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* November rate slows to 0.8 pct from 1.2 pct in October

* Gas prices post smaller year-over-year increase

* Bank of Canada has hinted about rate hikes

By David Ljunggren

OTTAWA, Dec 21 (Reuters) - Canada's annual inflation rate fell to a three-year low of 0.8 percent in November, raising questions about the Bank of Canada's stubborn insistence that the next move in interest rates will be an increase.

The annual rate, reported by Statistics Canada on Friday, is far below the Bank of Canada's 2.0 percent target. Analysts had expected annual inflation of 1.1 percent, down from 1.2 percent in October.

"I suspect they (the Bank of Canada) knew by a little while ago that they had overestimated growth, and I don't think there's going to be any sudden changes, but it will raise the question again whether they'll soon back away from their tightening bias," said Doug Porter, deputy chief economist at Bank of Montreal.