The main factor for the Bank of Canada is the direct impact of the GST on the consumer price index, the CPI. We think that the impact of the drop in the GST on the IPC will be about 0.6%.
The impact on the inflation rate will be the same, but only for one year. After one year, the effect of the price decrease will be eliminated and the inflation rate will be the same as it was before the GST was decreased.
The monetary policy will have to determine the trend of the inflation rate by excluding the GST, because the impact of the GST rate will only be felt for one year. Moreover, this impact is on the prices, and not on the inflation rate.