Market Wire, North America

As had been widely anticipated, the Bank of Canada held its benchmark overnight rate at 5 percent this morning, but language in the accompanying statement, Monetary Policy Report, and prepared comments tilted in a more clearly-dovish direction, helping lift market expectations for rate cuts in the first half of the year. Policymakers attempted to navigate a difficult communications challenge: while acknowledging signs of weakness in the economy and expressing approval of declining inflation pressures, they also sought to avoid repeating last year’s mistake – triggering a sharp rise in home prices and aggregate demand by encouraging an unwarranted easing in...

Canadian headline inflation accelerated as expected in December, but the underlying price indicators followed most closely by the Bank of Canada firmed – helping slash odds on an imminent pivot toward easier monetary policy. Data released by Statistics Canada this morning showed the Consumer Price Index rising 3.4 percent on a year-over-year basis in December, up from the 3.1 percent increase recorded in November, and precisely in alignment with consensus expectations. On a month-over-month basis, prices fell -0.3 percent – matching market forecasts. Gasoline prices fell -4.4 percent month-over-month, and food prices gained 0.3 percent. Shelter costs provided the biggest...