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Analysts On CAD CPI [1/2]

CANADA
  • BMO: “While no one expected inflation to go quietly into the night, this is a generally good news step in the right direction. Note that three provinces now have an inflation rate below 2%, while only three are above 3%, so much of the country is already seeing serious signs of stabilization. (Unfortunately, the two largest provinces have the fastest inflation rates—Quebec at 4.2%, Ontario is at 3.3%). Overall, today's result drives home the point that there is no need for further BoC tightening, especially with the economy already struggling to grow at all and underlying inflation calming. However, before the Bank can even begin seriously considering rate relief, we'll need to see more evidence that services inflation is also moderating—that could be at least another six months down the road.”
  • CIBC: “The headline CPI index isn't likely to show much progress by the end of year, as base effects could see it jump in December after a temporary further reprieve in November, with a large drop in energy prices from a year-ago dropping out of the annual calculation. However, the BoC will be more focused on its preferred core measures of trim and median, which should continue to decelerate on weak domestic demand, allowing policymakers to start cutting interest rates as early as Q2 next year.”
  • Desjardins: “This is exactly the type of progress that central bank officials have been waiting to see. If the door wasn’t already shut to additional rate hikes, it now should be. The market hasn’t moved much on the numbers, with yields lower before the data were released. However, looking at the core readings, we believe there’s more progress than initially meets the eye in the headline numbers. We continue to see room for shorter term bond yields to fall further.”
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