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Data released today showed inflation rose 0.3% in October. Analysts at CIBC point out the numbers confirmed that the Bank of Canada can cross consumer prices off its list of worries for now.

Key Quotes:  

“If there’s one thing that isn’t keeping Governor Poloz up at night, it’s inflation, which again came in on both the headline and core measures almost bang on the Bank of Canada’s 2% target. Inflation has been remarkably stable for a number of months, which will leave it up to potential disappointments on growth to drive policy changes at the Bank of Canada.”

“The average of the Bank of Canada’s three core measures again just missed the bullseye that is the Bank of Canada’s 2% target. The core-common component indicator, which we see as the best guide to underlying price pressures, came in just a tick below 2%. Even if the dropping of weak gas prices from a year ago in the 12-month inflation calculation drives the headline higher over the months to come, it’s unlikely to do much to the core measures, which should still be tracking close enough to target that the Bank of Canada can remain focused on growth indicators.”

“The Bank of Canada’s success in hitting its target of 2% inflation is something unusual amongst its developed-market peers, and it’s been one reason the central bank hasn’t been as eager to provide insurance rate cuts similar to those seen in the US. But, if growth numbers continue to disappoint, there could still be a Canadian rate cut coming in the new year.”