Analysts On November CPI Report

• BMO: “Today's moderately disappointing result drives home the point that we still have an inflation fight on our hands—in case there was really any doubt. […] This result will not be a big shock to the Bank, as it had pencilled in an average inflation rate of 3.3% for Q4 in its latest forecasts (which now looks doable, with December likely to print higher). Still, the latest result reinforces the message that markets had been a bit aggressive in their pricing of early and often rate cuts.”

Ordered by timing of expected first rate cut:

• Desjardins: “Today’s report represents less progress in taming inflation than we had expected. That said, there are still a number of signs pointing to a further normalization in underlying price pressures.”… “We are retaining our forecast that the BoC has enough evidence in hand to begin trimming rates in April 2024.”
• TD: “The BoC got a real mix in their inflation stocking this month” with no progress in headline and continued strength in services, but preferred core measures just below 2.5% annualized over the past three months. “Canada's economy has cooled in recent months, and inflation is slowly feeling the chill. We expect weaker demand in the economy will gradually see inflation come down enough for the BoC to cut rates in the second quarter of next year.”
• CIBC: “On a 3-month annualized basis the core measures were softer, and at 2.3% and 2.6% respectively they were the lowest since February 2021. While readings on a 3-month annualized basis are admittedly volatile, if such a trend were to persist for another few months it should give the BoC comfort that headline inflation is on a path back to target. […] With drivers of inflation becoming less broad-based, the BoC’s preferred core measures should continue to decelerate, which combined with a sluggish trend in economic activity will likely bring a first interest rate cut in June next year.”
• RBC: “If anything, the release today serves as a reminder that inflation readings can still be “sticky”, and why we continue to expect a cautious approach as the BoC starts to think about when to begin cutting interest rates. Our expectation is for the first rate cut to come around mid-year 2024, contingent on further (but widely expected) softening in CPI readings in the months ahead.”