Canadian inflation matched the central bank’s target last month for the first time in more than three years, smoothing the road for further cuts in interest rates.

Inflation in Canada fell to the slowest yearly pace since February 2021 and core measures continued to ease, keeping the door open for larger interest rate cuts from the Bank of Canada.

Canada's annual inflation rate reached the central bank's target in August at it cooled to 2%, its lowest level since February 2021, data showed on Tuesday.