Analysts On CPI [3/3]

CIBC also looks for a first cut in June but suspect the BoC could start to widen focus on inflation measures

• CIBC: “Core goods inflation is running at 2.2% y/y, while services ex. shelter inflation is running at 2.4% y/y. CPIX eased to 2.66% from 2.80% y/y. While these readings are still above the 2% target, they are all substantially lower than the 4-5% ranges that were seen earlier in the year, and are better indicators of underlying inflationary progress than the Bank's stated preferred measures at the moment given structurally higher housings costs and the inclusion of mortgage interest costs. The BoC is fully aware of that and we suspect they could gradually give weight to a broader suite of measures of underlying inflation.”
• “Headline inflation likely won't fall into the BoC’s target range for a few months, but the key to our call for the Bank to start cutting interest rates in June will be further progress in core measures, particularly excluding shelter costs, which are being impacted directly by the BoC’s previous interest rate hikes. Sluggish economic growth and the deterioration in the labour market should leave underlying core measures on a decelerating track ahead.”