Analyst Takes On CPI

Initial analyst reviews keep to prior BoC rate calls for the Sept meeting although BMO notes a minimum of a 50bp hike.

• BMO: Headline inflation likely to remain very sticky close to 8% through 2H22. So, while [headline] inflation is coming in a tad below the BoC’s latest forecast (8% for Q3av.), we still look for a minimum of a 50bp hike in Sept.
• CIBC: Inflation seems to finally have started its long descent but the acceleration in inflation ex food & energy will be a concern. The focus ahead shouldn’t be on declining headline but shelter prices (outside of mortgage costs), which should decelerate with the cooling housing market, and overall service inflation. For now, the BoC remains on track for a 75bp hike in Sept.
• RBC: Not unreasonable to expect headline CPI, together with the breadth of inflation pressure to be turning a corner. But the pace of inflation is still far above the BoCs comfort zone and consumer demand will likely need to soften a lot more. Look for a 75bp hike in Sept and a year-end rate of 3.5%.