Notes From the Desk: Canadian Inflation – The Trend Is Your Friend
February’s CPI data surprised to the downside, opening the door wider for the Bank of Canada (Boc) to cut rates later this year.
The Numbers.
- YoY CPI: 2.8% (3.1% expected)
- YoY CPI Trim: 3.2% (3.4% expected)
- YoY CPI Median: 3.1% (3.3% expected)
The implications.
- The BoC will be very happy with today’s data, as declines in cellular service, internet access, and groceries offset higher gas prices.
- Over the past few weeks, yields rose as investors concluded that January’s softer inflation data was an anomaly rather than a trend. February’s numbers suggest that higher rates and weaker economic growth are having a meaningful impact on prices.
- The odds are rising that the BoC will use the April meeting to start preparing Canadians for a rate cut in June. In anticipation of such a signal, yields are lower by 10-15 bps.
