The May CPI report is watched closely after the BoC cut its policy rate for the first time this cycle earlier this month, citing disinflationary progress
EXECUTIVE SUMMARY
- Canada CPI released today (Jun 25) at 0830ET.
- Consensus sees headline easing one tenth to 2.6% Y/Y, helped by softer gasoline prices.
- The BoC’s preferred core measures are seen slowing just 0.05pps to 2.7% Y/Y after an impressive disinflationary run that gave the BoC confidence to cut for the first time this cycle earlier in June.
- Limited analyst estimates imply a three-month core rate lifting modestly back towards the 2% target mid-point.
- Whilst there is an array of core measures, we expect added focus on those median and trim metrics to help smooth out the impact from the first month with new weights.
- Markets price 15bp of cuts for the July meeting, with potential sizeable sensitivity to this print despite there still being another CPI report for June before the Jul 24 decision.
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