TORONTO (Reuters) – Canada’s annual inflation rate fell to 2.3% in March from 2.6% in February, helped by lower gasoline and travel tour prices.
Analysts had expected inflation to remain at 2.6%
Market reaction: [CAD/]
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COMMENTARY
KATHERINE JUDGE, SENIOR ECONOMIST AT CIBC CAPITAL MARKETS
“The easing in price pressures is consistent with the Bank of Canada cutting interest rates by 25 bps (basis points) at tomorrow’s meeting, with the downside risks to growth from the trade war outweighing any upside to inflation from tariffs in our view.”
ANDREW KELVIN, HEAD OF CANADIAN AND GLOBAL RATES STRATEGY, TD SECURITIES
“Big downside surprise offsets the previous month’s big upside surprise … I don’t think this changes much for the Bank of Canada for April.”
“I think their mind is probably more or less made up heading into this print and you are still talking about CPI inflation that is close to the bank’s target, you are still talking about core inflation metrics that are well above the bank’s target and that core inflation momentum – it’s 2.74% on a 3-month annualized basis – it’s certainly not something that’s going to produce panic at the Bank of Canada given that they’ve signaled that they want to wait until they have a bit more information on how the trade disruptions are going to impact the Canadian economy, particularly the inflation expectations side. I do expect they will hold (rates steady) in April.”
DOUG PORTER, CHIEF ECONOMIST AT BMO CAPITAL MARKETS
“Definitely on the surface, better than expected, milder than expected. … It’s a bit of a mixed message from this report. I’d say overall the Bank of Canada is probably a little bit more comfortable with this result than what we saw last month, but it’s still not great. It probably doesn’t give them a whole lot of comfort. … Does (the bank) look in the rearview mirror at still relatively sticky core inflation, or does it look forward knowing that the consumer and business sentiment has crumbled and the economy is likely to weaken in this quarter? That’s a tough call. … I don’t think anyone’s going to question their wisdom if they decide to trim tomorrow.”
(Reporting by Fergal Smith and Anna Mehler Paperny; Editing by Caroline Stauffer)
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