James Knightley, Chief International Economist at ING, suggests that they don’t expect a surprise in inflation data of Canadian economy as of September, when inflation shocked the consensus by coming in at -0.4% month-on-month.
Key Quotes
“We’re looking for a 0.2% MoM rise, with energy prices the main contributor.”
“September’s inflation estimate was wrong partly because analysts misjudged the impact of oil prices.”
“October’s energy price story should be positive given this month took the brunt of the gasoline rally. This should keep the headline figure propped up above the Bank of Canada’s 2% inflation target; we forecast 2.3% YoY.”
“The outlook for November is clearly less inflationary, with the emerging decline in oil prices posing downside inflation risks in the near-term.”
“Average inflation in 2019 is forecast at 2.1%, down from 2.3% this year. The BoC will continue to hike as long as its key rational (core inflation) is around the 2% target, and we expect two hikes in 1Q19 and 3Q19. We’re not ruling out a third increase but this is subject to downside risks subsiding.”
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