**As seen in Risk In The Week report 01/12/24, subscribe at cablefxm.co.uk/reports
Canada November consumer prices rose by 3.1% Y/y, this was unchanged from the prior but above the consensus median of 2.9%. An uptick was recorded in the core metric, November prices excluding food and energy rose by 3.5% Y/ y vs the prior 3.4%. Despite the upside, the consumer prices trend remains south, core CPI was rising by 5.4% a year ago. On the month, food prices rose faster than the prior, and goods saw the same rebound dynamic while services eased. While the data is not a game changer, analysts said that it will keep the BoC from shifting its monetary policy stance soon. However, just a day before the November CPI release, BoC’s Governor Macklem said that it was appropriate to cut the overnight rate during 2024 as policy was seen at a restrictive level.
Analysts at TD Securities warned that the BoC is likely to keep rates steady as its mandate looks to keep prices steady at 2%. Cutting the overnight rate might keep housing demand and growth supported which will make it harder for the central bank to achieve its price mandate, analysts said. This year is set to be difficult for the BoC and TD is expecting the central bank to do one of two: fight shelter- fueled inflation until the economy slows down sharply or recognize that growth/inflation dynamics will warrant rate cuts sooner rather than later.
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