Canadian Inflation Diverges from U.S., Bank of Canada in a Bind

#bankofcanada #canadainflation #canadianeconomy
Canada’s inflation rate surprised to the downside in February, diverging from the United States and presenting the Bank of Canada with a real problem: Cut and see the Dollar devalue (pushing inflation up) or keep rates high amid a worsening economy.

Links:

Speech by Senior Deputy Governor Rogers / Discours de la première sous-gouverneure Rogers:

https://www.youtube.com/watch?v=qSWmIifNv7U&t=1974s />
Statistics Canada to release February inflation report today:

https://www.thestar.com/business/unambiguously-good-inflation-slows-in-february-as-price-growth-unexpectedly-eases/article_4e3f6cfe-abe4-5c26-b100-431b96bf59e6.html

Canada CPI Preview: Forecasts from five major banks, inflation likely increased in February:

https://www.fxstreet.com/news/canada-cpi-preview-forecasts-from-five-major-banks-inflation-likely-increased-in-february-202403190727

Canada's inflation unexpectedly fell to 2.8% in February amid slower grocery price growth:

https://www.thestar.com/business/canadas-inflation-unexpectedly-fell-to-28-in-february/article_f4a9f608-e546-11ee-bcd0-338e5e9ee2ec.html

Return to 2% inflation rate could be a bumpy one. Here’s why:

https://globalnews.ca/news/10366951/canada-inflation-feb-2024-preview/

Policy interest rate:

https://www.bankofcanada.ca/core-functions/monetary-policy/key-interest-rate/

Canada's February inflation slows unexpectedly, ramping up June rate cut bets:

https://ca.finance.yahoo.com/news/canadas-inflation-rate-unexpectedly-eases-123448572.html

Consumer Price Index, February 2024:

https://www150.statcan.gc.ca/n1/daily-quotidien/240319/dq240319a-eng.htm?indid=3665-1&indgeo=0 />
Main contributors to the 12-month and 1-month change in the Consumer Price Index:

https://www150.statcan.gc.ca/n1/daily-quotidien/240319/t005a-eng.htm

Traders Boost Odds of June Rate Cut as Canada Inflation Cools:

https://www.bloomberg.com/news/articles/2024-03-19/canada-inflation-slows-to-2-8-in-february-below-expectations

Canada 5 Year Government Bond:

https://www.marketwatch.com/investing/bond/tmbmkca-05y?countrycode=bx />
U.S. inflation ticked up in February, driven by higher rent and gas prices:

https://www.cbc.ca/news/business/us-cpi-data-inflation-february-1.7141045

The Federal Reserve will cut interest rates 6 times in 2024 as the economy shows clear signs of cooling down, ING says:

https://ca.finance.yahoo.com/news/federal-cut-interest-rates-6-033847698.html

U.S. Federal Reserve leaves key interest rate unchanged, expects 3 rate cuts in 2024:

https://www.cbc.ca/news/business/federal-reserve-interest-rate-cuts-1.7058078

Federal Reserve may signal fewer interest rate cuts in 2024 after strong inflation reports:

https://www.usatoday.com/story/money/2024/03/18/federal-reserve-fewer-rate-cuts/72978526007/

The BoC’s Shelter Inflation Problem:

https://economics.td.com/ca-boc-shelter-inflation-problem

The 6% commission on buying or selling a home is gone after Realtors association agrees to seismic settlement:

https://www.cnn.com/2024/03/15/economy/nar-realtor-commissions-settlement/index.html

Inflation frustration may prompt Fed to dial back rate-cut outlook:

https://www.reuters.com/markets/us/inflation-frustration-may-prompt-fed-dial-back-rate-cut-outlook-2024-03-18/

Canadian Dollar/U.S. Dollar:

https://www.theglobeandmail.com/investing/markets/currencies/CADUSD/

Fed will have to keep rates high for longer than markets anticipate, say economists:

https://www.ft.com/content/9d58ff6a-c6c4-4740-b3aa-5699a865c7f4

Canadian economy not in recession, but 2023 was one of its weakest recent years:

https://www.cbc.ca/news/business/canada-gdp-q4-2023-1.7129323

Bank of Canada urged to move 'aggressively' on interest rate cuts:

https://financialpost.com/news/economy/bank-of-canada-urged-move-aggressively-rate-cuts

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