Canadian Dollar: CPI test for BoC inflation warning – BBH
Brown Brothers Harriman’s (BBH) Elias Haddad notes that Canada’s August Consumer Price Index (CPI) will test the Bank of Canada’s (BoC) warning that upside inflation risks have increased. Headline CPI is expected to remain at 3.0% y/y, while core measures are seen hovering around 2%.
Brown Brothers Harriman (BBH) analyst Elias Haddad observed that Canada's August Consumer Price Index (CPI) will be tested against the Bank of Canada's (BoC) warning that inflation risks on the upside have increased. The headline CPI is anticipated to stay at 3.0% year-over-year (y/y), while core measures are forecasted to fluctuate around 2%.
A core inflation reading exceeding 2% would bolster the case for a 25 basis points (bps) Bank of Canada rate hike to 2.50% on October 28, thus benefiting the Canadian Dollar (CAD). Conversely, a core inflation reading at or near 2% y/y might prompt a slight dovish adjustment in expectations. Canada's August CPI figures are set to be released on Monday, providing insight into price pressures following the BoC's September 2 meeting, where officials maintained the interest rate at 2.25%, aligning closely with analyst expectations.
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