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Rising Inflation In Canada

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Rising Inflation In Canada

Statistics Canada is this morning updating the markets on Canadian inflation data for the month of March. The headline Consumer Price Index (CPI) has yielded a year on year reading of 1.5%, this is higher than the February figure of 1.1% and clearly exceeds the expected 1.4% projection. Month on month this number came in at 0.6%, this is slightly down on the previous reading of 0.8% but beats the 0.4% forecast. The final piece of data from Statistics Canada was the Core CPI figure, the month on month reading for this has just been published at 0.3% meeting the forecast but short of the 0.7% posted in February.

In addition to Statistics Canada, the Bank of Canada (BoC) also produces it’s own inflation metrics. The Bank of Canada CPI Core reading month on month for March has come in at 0.3%, this is as projected but below the prior months 0.7%. Finally, the key Band of Canada CPI Core year on year figure is 1.3%, this is evidence that price growth is accelerating from last months 1.2%, a level of 1.3% had been expected.

The Bank of Canada yesterday left the economy’s benchmark overnight rate stable at 1% following it’s regular monetary policy meeting. The BoC reconfirmed that it remains upbeat on economic expansion but at the same time took the opportunity to pare back its first quarter growth reading, primarily due to the effects of the harsher than usual winter conditions. BoC Governor, Stephen Poloz, said he fully expects both the Canadian and the Global economies to show strong growth in 2014 but that the Bank is maintaining both a neutral policy stance and an open mind. Markets were somewhat surprised to learn that the BoC may be willing to consider a rate cut in the near future if one is warranted, prior to this all expectations were for the Bank to adopt tighter monetary policies.

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