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CANADA DATA: January CPI Next Week With BoC Seen Slightly More Likely To Pause

CANADA DATA
CanadaData BulletBulletMarketsFixed Income BulletsForeign Exchange BulletsNorth America
  • Tuesday’s January CPI report is the sole CPI release since the Jan 29 decision. The market currently sees a little less than 50/50 odds of another 25bp cut on Mar 12, slightly leaning in favour of a pause, although US tariff deliberations are likely a more important factor.
  • The initial 25% tariffs on all Canadian products except for 10% on energy products saw a 30-day postponement until Mar 4 after Canada agreed to bolster border security, whilst 25% tariffs specifically on steel & aluminium is currently set for Mar 10.
  • With downside risks to Canadian growth, GDP data for Q4 and the January advance on Feb 28 should be watched increasingly closely after recent signs of prior monetary policy easing boosting activity.
  • With those points in mind, the early days for Bloomberg consensus currently sees headline CPI holding at 1.8% Y/Y whilst median is unchanged at 2.4% Y/Y and trim inches a tenth higher to 2.6% Y/Y (BoC target range 1-3%).
  • Remember that Senior Dep Gov Rogers downplayed the strength seen in CPI-trim at last month’s BoC press conference, saying the way it’s calculated has led them not to put much weight on it at this point in time. That leaves only one of its three 'new' core measures actively watched, CPI-median, having earlier in the cycle abandoned CPI-common. All else equal, we imagine this will start to see greater market focus on the more traditional core metrics such as CPIxFE and CPIX.
  • The temporary GST/HST holiday will continue to impact inflation readings this month.
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  • Tuesday’s January CPI report is the sole CPI release since the Jan 29 decision. The market currently sees a little less than 50/50 odds of another 25bp cut on Mar 12, slightly leaning in favour of a pause, although US tariff deliberations are likely a more important factor.
  • The initial 25% tariffs on all Canadian products except for 10% on energy products saw a 30-day postponement until Mar 4 after Canada agreed to bolster border security, whilst 25% tariffs specifically on steel & aluminium is currently set for Mar 10.
  • With downside risks to Canadian growth, GDP data for Q4 and the January advance on Feb 28 should be watched increasingly closely after recent signs of prior monetary policy easing boosting activity.
  • With those points in mind, the early days for Bloomberg consensus currently sees headline CPI holding at 1.8% Y/Y whilst median is unchanged at 2.4% Y/Y and trim inches a tenth higher to 2.6% Y/Y (BoC target range 1-3%).
  • Remember that Senior Dep Gov Rogers downplayed the strength seen in CPI-trim at last month’s BoC press conference, saying the way it’s calculated has led them not to put much weight on it at this point in time. That leaves only one of its three 'new' core measures actively watched, CPI-median, having earlier in the cycle abandoned CPI-common. All else equal, we imagine this will start to see greater market focus on the more traditional core metrics such as CPIxFE and CPIX.
  • The temporary GST/HST holiday will continue to impact inflation readings this month.