Notes From The Desk – CAD September CPI – A No-Brainer Next Week
Today’s CPI is the last major data point before next week’s Bank of Canada decision, and it certainly means they will cut the policy rate.
The numbers:
- YoY CPI 1.6% (1.8% expected)
- The main driver of the decline in headline inflation was a YoY drop of 10.7% in gasoline prices
- The YoY average of the two core measures came in at 2.35% (2.4% expected)
- The YoY pace of rent increases slowed from 6.2% in June to 5% in September
The implications:
For Governor Macklem and Co. the only debate is whether to cut by 25bps or 50bps.
Bond traders think there is a 75% chance of a jumbo cut as they have driven yields 6 to 7 bps lower.
