Inflation numbers in Canada showed prices rose above expectations in October. The CPI index rose 0.7% from a year earlier, up from 0.5%. Claire Fan, economist at RBC points out inflation risks point to the downside, leaving Bank of Canada officials free to focus on supporting the economy.
Key Quotes:
“Growth in food prices ticked up to 2.3% after trending lower in prior months. Energy price growth ticked lower again to -6% from year-ago, which is still well above the trough of -23.7% back in April.”
“The Bank of Canada’s preferred core measures (“trim”, “median”, and “common”) that control for the volatility in individual price components ticked up a tenth in October, averaging at 1.8% year over year.”
“The economy is still running significantly below long-run capacity limits, with additional near-term downside risks coming from more stringent containment measures that could yet be imposed should the virus spread worsen. That should all keep a lid on inflation in the near-term and leaves monetary policymakers still free to focus on supporting the economy by keeping interest rates low.”
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