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A Better CPI Report From The BoC's Perspective

[correcting second chart which should have been labelled 3-month annualized and not just M/M]
  • It’s a good CPI report from the BoC’s perspective, with some of last month’s surprise strength in core measures revised away and then moderating in today’s latest September data.
  • Specifically, the average of trim and median measures slowed to 0.17% M/M in Sep from 0.39% in Aug (revised down from 0.44).
  • It meant the three-month trend rate, a rate the BoC has put a lot of emphasis on, dropped back to 3.7% annualized from 4.3% (initial 4.5%), back into its 3.5-4% range seen since Aug’22 in all but two months now. See charts for revisions below.
  • It’s still clearly higher than the BoC would like, with the BoC previously showing some frustration that inflation wasn’t moving further below that range (and part of the reason for coming off the sidelines with 2x25bp hikes in June and July), but it’s a step in the right direction compared to the August report.
  • Other core 3-month measures sit at 3.3% annualized for ex food & energy and 2.4% annualized for ex 8 most volatile & indirect taxes.
  • Reuters reported shortly after the release that money markets now see a 26% chance of a hike next week from 43% before the data.

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