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21/05/24
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CAD Inches Down as Core Inflation Slips
On Tuesday, the Canadian dollar inched down and USD/CAD traded at about 1.3655, up 0.24% in the North American session.
In April, the headline inflation in Canada continued to drop, falling to 2.7% y/y, from March’s 2.9% and matched the market estimate. The headline figure fell to 0.5% monthly, down from March’s 0.6%, and matched the market estimate. The drop in inflation was led by food prices growing slower.
Core CPI in April dropped sharply and fell falling to 1.6% y/y. This was 2% lower than in March and was the lowest level in 3 years. Core CPI dropped to 0.2% monthly, down from March’s 0.5% and lower than the 0.4% market estimate.
The Bank of Canada will meet again on June 5 and will undoubtedly be happy with the inflation release. Although the BoC has indicated that it is getting closer to a rate cut, policymakers would like to see more evidence that the downward trend in inflation will stay sustainable and that inflation won’t rebound after rates are cut. It is expected the BoC will begin cutting rates in June or July.
The is still cautious about cutting rates. Fed Vice Chair Philip Jefferson said on Monday that it was too soon to determine if inflation’s downtrend would last long.
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