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May Inflation Watch: BoC To Assess If Deceleration Is "Sustained"

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  • Markets are split on whether the BoC will cut on the June 5th rate decision or wait until July.
  • BoC said June rate decision would focus on: evolution of excess demand, inflation expectations, wage growth, and corporate pricing power.
  • Headline inflation, along with the BoC's preferred core measures, were the slowest in three years in April. Headline CPI YOY has been within the BoC target range so far this year; the Bank projected inflation to be close to +3% in H1'24.
  • Governor Macklem says economy has moved into excess supply. The Q1 GDP report will be released on the 31st of May where growth is tracking at +2.5% annualized, slightly below the BoC forecast for +2.8%. (The Bank in April upgraded Q1 estimate from +0.5%)
  • The Bank says consumer and business near-term inflation expectations moderated over Q1 2024, but remain elevated.
  • Unemployment remained at +6.1% in April from the month before despite large employment gains as the labour force +108K. Macklem has said that a broad range of indicators suggest the labour market is easing. Wage gains are still high with +4.7% from the April jobs report and +4.5% from the Feb payrolls.
  • Corporate pricing behavior is normalizing according to the MPR and a BoC Staff Analytical Note.
  • Global oil prices that were contributing to headline inflation and caused the BoC increase oil pricing assumptions in projections have started fading. Expectations on the US monetary policy trajectory will impact pricing; CPI will be released on May 31st. OPEC+ countries are expected to cut output on June 2nd.
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  • Markets are split on whether the BoC will cut on the June 5th rate decision or wait until July.
  • BoC said June rate decision would focus on: evolution of excess demand, inflation expectations, wage growth, and corporate pricing power.
  • Headline inflation, along with the BoC's preferred core measures, were the slowest in three years in April. Headline CPI YOY has been within the BoC target range so far this year; the Bank projected inflation to be close to +3% in H1'24.
  • Governor Macklem says economy has moved into excess supply. The Q1 GDP report will be released on the 31st of May where growth is tracking at +2.5% annualized, slightly below the BoC forecast for +2.8%. (The Bank in April upgraded Q1 estimate from +0.5%)
  • The Bank says consumer and business near-term inflation expectations moderated over Q1 2024, but remain elevated.
  • Unemployment remained at +6.1% in April from the month before despite large employment gains as the labour force +108K. Macklem has said that a broad range of indicators suggest the labour market is easing. Wage gains are still high with +4.7% from the April jobs report and +4.5% from the Feb payrolls.
  • Corporate pricing behavior is normalizing according to the MPR and a BoC Staff Analytical Note.
  • Global oil prices that were contributing to headline inflation and caused the BoC increase oil pricing assumptions in projections have started fading. Expectations on the US monetary policy trajectory will impact pricing; CPI will be released on May 31st. OPEC+ countries are expected to cut output on June 2nd.