Canada CPI: Some positive news on disinflation should help reinforce rate cuts are coming – TDS
|In Canada, the first Consumer Price Index (CPI) report in 2024 came in softer than expected. Economists at TD Securities analyze if the Bank of Canada (BoC) could pivot to interest rate cuts.
The BoC will continue to proceed cautiously
The January CPI report surprised to the downside with inflation falling 0.5pp to 2.9% YoY as prices held unchanged on the month. Airfares and core goods helped drive the deceleration while telecoms provided a source of strength. January also brought further progress on CPI-trim/median with 3m rates of core inflation running at 3.2%.
Today's report is a meaningful event for the near-term BoC outlook and should help reinforce rate cuts are coming. Still, we think the Bank will proceed cautiously and require further evidence of moderation before it shifts its stance.
Today's report will not be enough for the Bank to declare mission accomplished in March, but it does move the goalposts a little closer.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.