National Bank of Canada analyst Matthieu Arseneau, points out that the combination of a tight labour market and fading global uncertainties should keep core inflation above the Bank of Canada target of 2% for the foreseeable future. They don’t see rate cuts as an unlikely scenario.
Key Quotes:
“Canadian headline inflation was in line with expectations in November with the seasonally adjusted CPI showing a modest rise of 0.1% month over month. However, don’t be misled by this showing: the increase was actually 0.15%. Second, CPI in November was negatively impacted by a 0.8% drop in recreation/education. The latter was the only component showing a pullback among the 8 major categories.”
“The core measures preferred by the Bank of Canada were above consensus in November, with the average of the three gauges coming in at 2.2%, its highest level in a decade. Note that our in-house replications of CPI-Trim and CPI-median both rose 0.2% in October and November, a stronger pace than what the average core annual rate is showing.”
Share
