Analysts On CPI [2/3]

BMO and RBC looking for first cut in June/mid-year.

• BMO: “The slightly more unsettling news is the persistence of core in the mid-3s. That sticky theme was echoed in yesterday's BOS, and suggests that the last mile of the inflation fight may prove to be the most challenging—bringing underlying inflation sustainably back below 3%. Given that wage trends are also stuck in the 4%-to-5% range, and now even housing may be showing a pulse, suggests that the BoC will doggedly maintain a cautious stance at next week's rate decision and MPR. We are comfortable with our call of a first rate cut at the June meeting, even as the market leans in earlier.”
• RBC: “Today’s CPI report was more mixed than the headline reading would suggest. The acceleration in airfares and car price growth in December is unlikely to be repeated and strength in the shelter component, especially in rent prices also persists. Still, over on a three-month annualized basis the scope of inflation pressures continues to narrow/improve – suggesting on balance that price pressures were still unwinding.” Yesterday’s quarterly BoC surveys “also provided more indications that price growth should continue to slow, as businesses plan for smaller / less frequent upward price adjustments in the year ahead amid a slower economic backdrop and sluggish consumer demand. We continue to expect the BoC to tread cautiously and watch the data carefully, but for further slowing inflation to allow a pivot to interest rate cuts around mid-year.”