Analysts On CAD CPI

Some firming of June cut calls although BMO see it as a close call, whilst TD stick to a July cut but see June as getting tighter.

• CIBC: In April, “the BoC Governor stated that policymakers were encouraged by recent subdued inflation readings, but needed those to persist for longer before cutting interest rates. Since then we have received two more months of data pointing to tame underlying inflation, for a total of four in a row, and as such there doesn't appear to be a good reason not to cut interest rates at the next meeting in June. We continue to forecast a first reduction at that meeting, with a total of four 25bp cuts before the end of the year”.
• Desjardins: “Even the normally cautious Statistics Canada went so far as to characterize the release as a “broad-based deceleration in the headline CPI. […] At 2.7% y/y, headline inflation in April came in well below the Bank’s forecast of 2.9% for Q2 in the April 2024 MPR. Most measures of underlying inflation are now comfortably under 3% as well.” Combined with real GDP growth tracking softer, and even worse on a per capita basis, “these economic indicators help to reinforce our call that rate cuts are likely to begin at the BoC’s upcoming June interest rate announcement.”
• RBC: “April's inflation readings largely met expectations, but with underlying details (including further slowing in the BoC's preferred 'core' measures) pointing to further reduction in inflationary pressures. […] The case for interest rate cuts from the BoC continues to build, with today's report in line with our own base case for a first cut in June.”
• BMO: “There is really no debate that monetary policy is tight in Canada, and that it is now consistently weighing on underlying inflation. The key question for the BoC is whether inflation has tamed sufficiently to now start reducing the degree of restrictiveness. We believe that the door is open for a BoC rate cut, and we have been leaning to June move for the past six months. But it remains a close call, and when the Bank does eventually move, it will be gradual with a highly patient Fed acting as a limiter on how far and how fast Canadian rates can fall.”

• TD: “The BoC's preferred measures of core inflation slowed to 2.75% y/y in April, with another 0.1% m/m increase for CPI-trim/median which left these two running at 1.6% (saar) over the last three months. That does give the BoC some added evidence of sustained progress, but we do not think it is a decisive signal to the BoC. June is shaping up to be a close call, but we continue to look for the first cut in July.”