Local Analysts on CPI [1/2]

Local analysts see today’s inflation report as justifying the Bank’s conditional pause.

• BMO: With inflation subsiding on both headline and core measures, the BoC is in a less awkward position than many others during the recent financial turmoil (headline poised to come in below 5.4% for Q1 vs the U.S. at 6.0% last month, Australia at 7.2%, EA 8.5%, and the UK 10.1%). There's really no underlying reason for the Bank to hike further, especially with the C$ finding a footing. The Bank's pause looks prudent, and we expect them to stay at current levels for quite some time, barring a major flare-up in the banking turmoil.
• CIBC: This release supports our call for the BoC to remain on pause in April. CPI ex food, energy & mortgage interest costs saw a 3-month annualized rate at 2.3% in Feb, suggesting policy has already slowed the economy enough for inflation to stay around the 2% goal. We continue to expect headline inflation to ease below 3% by May, although continued strength in food prices and mortgage interest costs will likely keep the annual pace sticky between 2-3% throughout the 2H23.