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CPI Probably Lends Cover to The Bank of Canada to Extend its Pause, For Now
Canadian core measures of inflation noticeably weakened in the latest readings including revisions that lowered prior estimates. Canada’s front-end is subsequently outperforming the US front-end with the latter buoyed by a relatively stronger than expected set of retail sales numbers. The Bank of Canada has cover to skip next Wednesday when its MPR tome drops with a dull thud. I expect a hold at a 5% overnight rate with continued guidance that they “are prepared to increase the policy rate further if needed.” To do anything less than that would violate what I think are ongoing upside risks to trend inflation ... (full story)