New data from now to October 25 could still influence the central bank’s next rate announcement
At the moment, anticipating the Bank of Canada’s future steps might prove difficult as there’s still plenty of data coming up that could influence the central bank’s next policy announcement on October 25, according to BMO Economics.
This is in the wake of the latest inflation data that showed the annualized rate rising from 3.3% in July to 4% in August. Statistics Canada cited consumer prices, which went up by 0.4% last month, as the major driver of the August numbers.
“The news was no better on core trends, as they picked up across the board – trim rose to 3.9% y/y (from 3.6%), median was up 4.1% (3.9%), and ex food & energy rose 3.6% (3.4%),” said Douglas Porter, chief economist and managing director of economics at BMO.
“Equally concerning, the three-month trend on the core metrics all pushed up to around the 4.5% pace, or way too hot for the BoC’s comfort. Previously, the bank had been concerned that underlying trends looked like they were stuck around 3.5%, which now seems almost quaint.”
The Bank of Canada's recent decision to hold rates doesn't signal an end to potential rate hikes, warns James Laird, co-CEO of Ratehub and president of CanWise.
— Canadian Mortgage Professional Magazine (@CMPmagazine) September 11, 2023
Full article: https://t.co/Tt2uOIZbHq#mortgageindustry #ratehikes #interestrates #mortgagebroker
Porter stressed that the impact of the “inconvenient truth”, that core inflation has also heated up, should not be underestimated.
“Even excluding mortgage interest costs, prices are now up 3.2% y/y, or above the target band,” Porter said.
“Unfortunately, we suspect that with oil firing higher and core inflamed again, [the next CPI] will be no better than today’s – second verse, same as the first, a little bit louder and likely a little bit worse.”
