Free Trial

TD Need To See More Definitive CPI Signal To Have June Cut Conviction

CANADA
  • TD look for headline CPI to ease 0.1pp to 2.8% Y/Y in April on a 0.6% M/M (NSA) increase.
  • “Energy prices will be the key driver for the latter, while the shelter and apparel components provide another source of strength.”
  • “Core inflation measures should offer some mixed signals in April with CPI-trim/median forecast to rise by 0.2% m/m, translating to a 0.2pp deceleration to 2.9% y/y for CPI-trim as CPI-median edges lower to 2.7% y/y.”
  • “However, 3m rates of core CPI should give a less dovish interpretation, firming by 0.6pp to 1.9%.”
  • “The April CPI report could be one of the most impactful in recent memory with the BoC’s forward guidance centered around its desire for "sustained progress".
  • “While the Bank could point to the continued deceleration across headline/core CPI as evidence this has materialized, we believe it would take a more definitive signal to give the Bank conviction to cut rates in June.”
154 words

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
  • TD look for headline CPI to ease 0.1pp to 2.8% Y/Y in April on a 0.6% M/M (NSA) increase.
  • “Energy prices will be the key driver for the latter, while the shelter and apparel components provide another source of strength.”
  • “Core inflation measures should offer some mixed signals in April with CPI-trim/median forecast to rise by 0.2% m/m, translating to a 0.2pp deceleration to 2.9% y/y for CPI-trim as CPI-median edges lower to 2.7% y/y.”
  • “However, 3m rates of core CPI should give a less dovish interpretation, firming by 0.6pp to 1.9%.”
  • “The April CPI report could be one of the most impactful in recent memory with the BoC’s forward guidance centered around its desire for "sustained progress".
  • “While the Bank could point to the continued deceleration across headline/core CPI as evidence this has materialized, we believe it would take a more definitive signal to give the Bank conviction to cut rates in June.”