Here's what economists say the latest inflation numbers mean for the Bank of Canada
The rate of inflation slowed to 1.9 per cent in November, once again slipping under the Bank of Canada target of two per cent.
The headline consumer price index (CPI) number came in weaker than analyst expectations of two per cent, but policymakers’ preferred measures of core inflation accelerated last month more than analysts expected, according to data released by Statistics Canada on Tuesday.
The Bank of Canada on Dec. 11 said any future rate cuts would come on a meeting-by-meeting basis after it cut rates by 50 basis points.
Here’s what economists think the latest numbers mean for the Bank of Canada as it faces a fresh year of interest rate decisions starting on Jan. 29.
Some of the slowdown in the rate of inflation can be attributed to Black Friday discounts, said Royce Mendes, managing director and head of macro strategy at Desjardins Group, even though food and energy prices rose, albeit at a slower pace.
“Given the seasonal element in those price declines, the Bank of Canada would typically look to its preferred core measures of inflation to guide upcoming monetary policy decisions,” he said in a note.
Those measures — CPI-median and CPI-trim — accelerated 2.6 per cent and 2.7 per cent, respectively, rather than cooling or staying flat as analysts had expected.
Mendes said the gains were due to the inclusion in November of mortgage interest costs, which had previously been excluded.
Mortgage interest costs have been steadily slowing since the Bank of Canada started cutting interest rates in June.
“Central bankers might want to look through that strength in their preferred measures,” Mendes said.
However, excluding shelter, the Bank of Canada’s preferred inflation measures are still coming in above the top end of
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