Latest news with #KatherineJudge
Calgary Herald
12 hours ago
- Business
- Calgary Herald
Economists split on what inflation numbers mean for Bank of Canada rate cut
Article content Inflation growth held steady in May at 1.7 per cent year over year, but economists are split on whether it provides enough evidence for the Bank of Canada to cut rates at its next policy meeting in July. Article content Core CPI-median and CPI-trim inflation grew three per cent in May, down from 3.2 per cent and 3.1 per cent in April, respectively, matching analyst estimates while remaining well above the Bank of Canada's inflation target of two per cent. Article content Article content Bank of Canada policymakers have made it clear that their attention is focused on inflation and the possibility that tariffs could cause another spike. Article content Article content The Bank of Canada's target range for inflation is one per cent to three per cent. Article content Here's what economists think the latest inflation numbers mean for the Bank of Canada and interest rates. Article content An ongoing pullback in rent and mortgage costs will help counter the effects of tariffs on the price of goods, Katherine Judge, an economist at CIBC Capital Markets, said. Article content The cost of food boosted the Bank of Canada's favoured core inflation measures, but the price of groceries 'sharply' fell last month. Article content 'The appreciation in the Canadian dollar over the last few months is helping to contain food prices amidst tariffs,' she said in a note. Article content Article content Canada has a lot of exemptions on its counter tariffs on the U.S., so the effects of U.S. levies are mostly on finished goods, such as vehicles and some food. Article content 'Tariff impacts will become more evident in the releases ahead, but we look for waning demand tied to the rise in the unemployment rate to provide an offset, along with the appreciation in the Canadian dollar, and a deceleration in shelter inflation,' Judge said.
Yahoo
19 hours ago
- Business
- Yahoo
Canadian CPI steady at 1.7% in May amid slower growth in housing, travel costs
-- Canada's annual inflation rate held steady at 1.7% in May, unchanged from April and in-line with analyst estimates, according to data released by Statistics Canada on Tuesday. The subdued pace was driven by a softer increase in rent and a decline in package travel prices, which helped offset modest upward pressure from gas and mobile service costs. Excluding energy, the Consumer Price Index (CPI) rose 2.7% year-over-year in May, down from 2.9% a month earlier, highlighting underlying price moderation. On a monthly basis, the all-items CPI rose 0.6%, with the seasonally adjusted figure showing a more modest 0.2% gain. CIBC (TSX:CM)'s Katherine Judge called the report "a step in the right direction for a July cut." "Overall, the moderation in core measures is a step in the right direction for the Bank of Canada and they will want that progress to be maintained in the next report in order to feel comfortable cutting in July," she concluded. The deceleration in shelter prices played a central role in the overall inflation picture. "The increased availability of rental units, coupled with slower population growth compared with spring of the previous year, contributed to the slowdown in rent price growth in May," Statistics Canada said. Rent prices rose 4.5% year-over-year, down from April's 5.2%, with Ontario posting the sharpest drop due to increased vacancy rates. Meanwhile, mortgage interest costs, another major component of shelter, also slowed, rising 6.2% in May after a 6.8% increase in April. This marks the 21st consecutive month of deceleration for the index, reflecting cooling pressures in the housing finance segment. In transportation, prices for travel tours slipped 0.2% annually in May after a sharp 6.7% increase in April. Airfares declined 10.1% year-over-year, adding further drag to the headline figure, compared with a 5.8% drop the previous month. Gasoline prices were 15.5% lower compared to May last year, though they posted a 1.9% increase month-over-month due largely to higher refining margins. The decline in annual prices reflects the removal of the federal carbon levy, which kept pump costs under pressure compared to 2024. Telecommunications prices also saw notable month-over-month volatility, with cellular service prices jumping 7.2% in May after the end of promotional offers. Still, consumers paid 5.5% less than they did a year earlier—an easing compared with April's 10.8% annual decline. Regional dynamics varied, with inflation accelerating in six provinces and slowing in three. In Alberta, homeowner insurance costs rose sharply for the second straight month, climbing 11.9% year-over-year in May, up from 7.7% in April, according to Statistics Canada. Related articles Canadian CPI steady at 1.7% in May amid slower growth in housing, travel costs Cleveland Fed's Hammack sees no need for imminent rate cuts Trump says Israel-Iran ceasefire now in effect
Yahoo
15-04-2025
- Business
- Yahoo
Bank of Canada interest rate cut odds jump following unexpectedly slow March inflation data
The Bank of Canada has a stronger case to cut its policy rate at its next meeting on Wednesday, say economists responding to the latest inflation data. Statistics Canada reported the annual rate of inflation slowed unexpectedly in March to 2.3 per cent, driven largely by lower gasoline and travel costs. In a release Tuesday, Canada's federal data agency says the slowdown was held back by the end of the temporary break on the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) on Feb. 15, which put upward pressure on prices for eligible products in March versus February. Gasoline prices fell 1.6 per cent year-over-year in March. Statistics Canada says this was largely due to lower oil prices (CL=F) amid concerns of slowing global demand, and slowing economic growth related to the threat of tariffs. "Canadian inflation slowed sharply in March," CIBC economist Katherine Judge wrote in a note to clients on Tuesday. "The easing in price pressures is consistent with the Bank of Canada cutting interest rates by 25 basis points at tomorrow's meeting, with the downside risks to growth from the trade war outweighing any upside to inflation from tariffs in our view." Economists had expected the Consumer Price Index (CPI) to rise to 2.7 per cent in March, according to consensus estimates published by CIBC Capital Markets. CIBC's team of economists called for a 2.5 per cent reading. Scotiabank Economics and BMO Economics predicted an increase to 2.7 per cent. Canada's annual inflation rate jumped to 2.6 per cent in February, following an increase of 1.9 per cent in January. Besides falling gas prices, lower costs in the recreation, education, and reading category helped push inflation lower in March. Air transportation prices fell 12 per cent year-over-year, adding to a 4.4 per cent decline in February. Prices for cellular services also fell 8.8 per cent on an annualized basis. Statistics Canada notes lower prices for cell phone plans amid industry-wide promotions saw prices fall 6.8 per cent from February to March. "While economists estimated that the end of the 2024 Holidays' GST rebate and tariffs on U.S. food and alcohol items would drive inflation higher, broad based disinflationary factors combined to lower gasoline prices from the removal of the carbon tax appear to offset these changes," Dominique Lapointe, Manulife Investment Management's director of macro strategy, stated in an email. "We think the morning's print goes a long way to reassure the BoC about underlying inflation and as such reinforces our expectation of a cut at tomorrow's meeting," Lapointe added. "While it is not the economists consensus, it's worth noting that markets have moved from pricing in 35 per cent to 45 per cent odds of a cut after this release." According to Reuters, odds have whipsawed between favouring a hold and cut since last week. The news agency reports the odds for a pause in interest rates were around 58 per cent as of Friday. CPI-trim and CPI-median remained elevated in March, with little change. These core measures strip out changes in taxes, and are closely tracked by the Bank of Canada. On a monthly basis, inflation rose by 0.3 per cent in March. Seasonally adjusted, the monthly CPI was flat. "The headline reading says inflation risks ahead of tariffs were subsiding, and the BoC can afford to opt for an insurance cut like it did in March," RBC Economics economist Abbey Xu wrote in a report on Tuesday. Canada's central bank has cut at its last seven meetings, bring its policy rate to 2.75 per cent, the lowest level since September 2022. Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist. Download the Yahoo Finance app, available for Apple and Android. Sign in to access your portfolio
Yahoo
15-04-2025
- Business
- Yahoo
Bank of Canada interest rate cut odds jump following unexpectedly slow March inflation data
Canada's annual rate of inflation slowed unexpectedly in March to 2.3 per cent, according to Statistics Canada. The moderated price growth was driven largely by lower gasoline and travel costs. In a release Tuesday, Statistics Canada says the slowdown was held back by the end of the temporary break on the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) on Feb. 15, which put upward pressure on prices for eligible products in March versus February. Gasoline prices fell 1.6 per cent year-over-year in March. Canada's federal data agency says this was largely due to lower oil prices (CL=F) amid concerns of slowing global demand, and slowing economic growth related to the threat of tariffs. "Canadian inflation slowed sharply in March," CIBC economist Katherine Judge wrote in a note to clients on Tuesday. "The easing in price pressures is consistent with the Bank of Canada cutting interest rates by 25 basis points at tomorrow's meeting, with the downside risks to growth from the trade war outweighing any upside to inflation from tariffs in our view." Economists had expected the Consumer Price Index (CPI) to rise to 2.7 per cent in March, according to consensus estimates published by CIBC Capital Markets. CIBC's team of economists called for a 2.5 per cent reading. Scotiabank Economics and BMO Economics predicted an increase to 2.7 per cent. Canada's annual inflation rate jumped to 2.6 per cent in February, following an increase of 1.9 per cent in January. Besides falling gas prices, lower costs in the recreation, education, and reading category helped push inflation lower in March. Air transportation prices fell 12 per cent year-over-year, adding to a 4.4 per cent decline in February. Prices for cellular services also fell 8.8 per cent on an annualized basis. Statistics Canada notes lower prices for cell phone plans amid industry-wide promotions saw prices fall 6.8 per cent from February to March. "While economists estimated that the end of the 2024 Holidays' GST rebate and tariffs on U.S. food and alcohol items would drive inflation higher, broad based disinflationary factors combined to lower gasoline prices from the removal of the carbon tax appear to offset these changes," Dominique Lapointe, Manulife Investment Management's director of macro strategy, stated in an email. "We think the morning's print goes a long way to reassure the BoC about underlying inflation and as such reinforces our expectation of a cut at tomorrow's meeting," Lapointe added. "While it is not the economists consensus, it's worth noting that markets have moved from pricing in 35 per cent to 45 per cent odds of a cut after this release." According to Reuters, odds have whipsawed between favouring a hold and cut since last week. The news agency reports the odds for a pause in interest rates were around 58 per cent as of Friday. CPI-trim and CPI-median remained elevated in March, with little change. These core measures strip out changes in taxes, and are closely tracked by the Bank of Canada. On a monthly basis, inflation rose by 0.3 per cent in March. Seasonally adjusted, the monthly CPI was flat. Tuesday's inflation reading from Statistics Canada precedes a rate decision from the Bank of Canada scheduled for Wednesday. Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist. Download the Yahoo Finance app, available for Apple and Android.
Yahoo
15-04-2025
- Business
- Yahoo
Canada's annual inflation rate slows to 2.3% in March, as gasoline and travel costs taper
Canada's annual rate of inflation slowed unexpectedly in March to 2.3 per cent, according to Statistics Canada. The moderated price growth was driven largely by lower gasoline and travel costs. Statistics Canada says the slowdown was held back by the end of the temporary break on the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) on Feb. 15, which put upward pressure on prices for eligible products in March versus February. Gasoline prices fell 1.6 per cent year-over-year in March. Canada's federal data agency says this was largely due to lower oil prices (CL=F) amid concerns of slowing global demand, and slowing economic growth related to the threat of tariffs. "Canadian inflation slowed sharply in March," CIBC economist Katherine Judge wrote in a note to clients on Tuesday. "The easing in price pressures is consistent with the Bank of Canada cutting interest rates by 25bps at tomorrow's meeting, with the downside risks to growth from the trade war outweighing any upside to inflation from tariffs in our view." Economists had expected the Consumer Price Index (CPI) to rise to 2.7 per cent in March, according to consensus estimates published by CIBC Capital Markets. CIBC's team of economists called for a 2.5 per cent reading. Scotiabank Economics and BMO Economics predicted an increase to 2.7 per cent. Canada's annual inflation rate jumped to 2.6 per cent in February, following an increase of 1.9 per cent in January. Tuesday's inflation reading from Statistics Canada precedes a rate decision from the Bank of Canada scheduled on Wednesday. Derek Holt, Scotiabank's head of capital markets economics, downplayed the potential impact of the new data on the central bank's rate decision in a research note published last Friday. 'Could it sway the call either way? That's highly doubtful,' Holt wrote. 'The BoC's forecasts and Monetary Policy Report will be set before the CPI release, and they are unlikely to be overly reactionary to just one set of numbers.' Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist. Download the Yahoo Finance app, available for Apple and Android. Sign in to access your portfolio
