After inflation surprisingly slowed in March, one chief economist says he doesn’t expect a cut from Canada’s central bank on Wednesday, but highlighted he is forecasting about 100 basis points of cuts during the year.
Statistics Canada reported Tuesday that the consumer price index rose 2.3 per cent on an annual basis in March, coming after an increase of 2.6 per cent the previous month. The figures came in lower than expectations among analysts polled by Reuters.
However, core measures of inflation, monitored closely by the central bank, remained elevated. CPI median came in at 2.9 per cent in March, holding steady from the month before and CPI-trim came in at 2.8 per cent.
The latest inflation figures come as U.S. tariffs on a variety of Canadian imports and Canadian retaliatory measures are expected to raise prices.
The latest inflation figures come as U.S. tariffs on a variety of Canadian imports and Canadian retaliatory measures are expected to raise prices.
“The Bank of Canada has a very muddled picture right now, but it doesn’t want to commit the mistake of 2022 of saying ‘this will just pass,’ because you’re seeing inflation expectations both in the U.S. and Canada shoot higher and this is something that the Bank of Canada takes seriously. So that’s why we lean on a pause still tomorrow,” Jimmy Jean, chief economist at Desjardins, said in an interview with BNN Bloomberg Tuesday.
The Bank of Canada is scheduled to make its next interest rate announcement on Wednesday.
“In the grand scheme of things, if we do see a significant shock to the global economy, to the U.S. economy in particular, that’s what we’re really concerned about right now, Canada will be in for the ride and, and that will be disinflationary in the end,” Jean said.
He added that he is expecting about 100 basis points of cuts from the Bank of Canada this year and for the bank to cease its rate cutting cycle at the end of the year.
