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📝Canada Inflation Supports Another 50Bps BoC Hike: TD

The average of the three Bank of Canada core inflation metrics remained unchanged (after rounding) at 5.4% y/y. Perhaps more importantly, the two measures that the BoC has indicated provided a more timely gauge of underlying inflation through the pandemic - CPI-trim and CPI-median, both picked up a tick to 5.3% y/y and 4.8% y/y respectively.

Today's inflation report underscores the need for the Bank of Canada to keep the pressure on interest rates to help bring down inflation. October's CPI report is one of two key remaining data releases before the Bank of Canada's next rate decision in three weeks, and it certainly ticks the box for another 50 basis point increase.

The other key piece of data will be the November jobs report in a couple of weeks. As outlined in our recent report on job vacancies Canada's labour market remains very tight. Even if we see a weak report, it is unlikely to move the needle enough on the job market to move the BoC off its tightening bias. - TD Securities



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