The key number for the BoC, such as the median core index (+0.2% and has been +0.3% or lower in each of the past four months) slowed to +3.9% year-over-year from +4.3% in April (consensus was +4.0%). Excluding the 8 most volatile components and indirect taxes, the CPI again eked out a modest +0.2% advance last month. This was a highly encouraging report and should allow the Bank of Canada to sit out the next meeting, especially now that the major surveys are flagging a turndown in employment. That’s down from about 64% prior to the data.ĭavid Rosenberg, founder of Rosenberg Research Interest rate probabilities based on trading in swaps markets now show about a 57% chance that Bank of Canada will hike rates by another quarter of a percentage point at its next policy meeting on July 12. counterpart following the data but soon recovered. The Canadian dollar dipped slightly against its U.S. The five-year bond yield influences fixed mortgage rates as well as some guaranteed investment certificate terms. The Canadian dollar and bond markets had minimal reaction to the 830 am ET inflation data, with the five-year government bond yield last quoted at 3.734%, up a couple basis points but well below the 15-year high of 3.896% last week and a more modest rise than its U.S. The average of two of the Bank of Canada’s core measures of underlying inflation, CPI-median and CPI-trim, came in at 3.9% compared with 4.3% in April. The annual rate, which benefited from a comparison to last May’s strong price increases, is the slowest since June 2021 and broadly in line with the Bank of Canada’s expectation that inflation would cool to around 3% by mid-2023.
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