12:23 PM EDT, 09/17/2024 (MT Newswires) -- The Toronto Stock Exchange edged higher midday on Tuesday as Canada's inflation rate fell to near pre-pandemic levels last month, firming expectations the Bank of Canada will continue to lower interest rates and a day ahead of the Federal Reserve's start to its own rate-cutting cycle.

The S&P/TSX Composite Index was up 10.00 points to 23,712.07 at noon, rising off a day-prior record close.

The rise come energy issues offered some support as oil prices continued to rebound from three-year lows touched last week. West Texas Intermediate crude oil for October delivery was last seen up US$1.32 to US$71.41 per barrel, while November Brent crude, the global benchmark, was up US$1.00 to US$73.75.

Gold moved lower as the dollar and yields rose after U.S. August retail sales were stronger than expected, the last data point before the interest-rate announcement coming Wednesday afternoon from the Fed's Federal Open Market Committee, with a cut of 50 basis points expected, though a smaller drop remains a possibility. Gold for December delivery was last seen down US$14.70 to US$2,594.20 per ounce.

Statistics Canada on Tuesday reported the August Consumer Price Index fell to 2%, the lowest in three years, firming expectations the Bank of Canada will continue cutting interest rates to stimulate a slowing economy.

"Inflation locked onto the 2% target in August for the first time since 2021, and with CPI excluding mortgage interest costs now a mere 1.2%, policymakers should be focusing on cutting interest rates to stimulate the economy and prevent a material undershoot of the inflation target ahead. Headline CPI fell from 2.5% year-over-year in July to 2.0% in August, which was a tick weaker than the consensus forecast. On a monthly basis, prices fell by 0.2%, and rose only +0.1% when adjusted for seasonality," CIBC Economics noted.

Canada' slowing economy was highlighted by another economic release on Tuesday, which showed housing starts plunged 22% in August from July, on a weaker performance in Ontario and British Columbia.

"That starts pulled back in August after July's hefty gain was not surprising. However, the extent of the decline was a surprise, and this is the first time that urban starts have dropped under 200k annualized units this year. That said, the prospect of some bounce back in September should leave starts above their Q2 average in Q3, pointing to some positive contribution to residential investment and overall economic growth," TD Economics noted.