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MNI GLOBAL WEEK AHEAD - FOMC Minutes and Flash PMIs In Focus

In a quiet week, FOMC Minutes and flash PMIs will likely garner the most cross-market attention.

TUESDAY - Canada CPI

Canada CPI lands on Tuesday. BoC communications from late January centred on how the discussion is shifting away from whether the policy rate is restrictive enough to how long it needs to stay at the current level, a point reiterated by Dep Gov Mendes on Tuesday. Mendes added that inflation is still too high and underlying inflation pressures are still too broad. This brings us to Gov. Macklem’s remarks at the January press conference when MNI asked about the shift in language to underlying rather than core inflation. “It’s more of a concept than a measure and reflects a number of things. The Bank's preferred measures of core inflation (CPI-trim, CPI-median) are a very important element), but we also look at other measures such as CPIxFE, CPIX and the breadth of price gains. Those are some of the key things we’re looking at as we assess the trend - we’re looking for continued evidence that inflationary pressures are easing with clear downward momentum.” To this end, we expect focus on metrics beyond just the BoC’s previously preferred median and trim measures. Different metrics have been pointing to a wide range recently, with the average of median and trim at 3.8% annualized over six months and CPIxFE at 3.7%, but CPIX within the 1-3% target band at just 2.5%.

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TUESDAY - Canada CPI

Canada CPI lands on Tuesday. BoC communications from late January centred on how the discussion is shifting away from whether the policy rate is restrictive enough to how long it needs to stay at the current level, a point reiterated by Dep Gov Mendes on Tuesday. Mendes added that inflation is still too high and underlying inflation pressures are still too broad. This brings us to Gov. Macklem’s remarks at the January press conference when MNI asked about the shift in language to underlying rather than core inflation. “It’s more of a concept than a measure and reflects a number of things. The Bank's preferred measures of core inflation (CPI-trim, CPI-median) are a very important element), but we also look at other measures such as CPIxFE, CPIX and the breadth of price gains. Those are some of the key things we’re looking at as we assess the trend - we’re looking for continued evidence that inflationary pressures are easing with clear downward momentum.” To this end, we expect focus on metrics beyond just the BoC’s previously preferred median and trim measures. Different metrics have been pointing to a wide range recently, with the average of median and trim at 3.8% annualized over six months and CPIxFE at 3.7%, but CPIX within the 1-3% target band at just 2.5%.

Keep reading...Show less