Market Wire, North America

Canadian inflation accelerated in August, but gasoline prices drove much of the gain and many underlying price indicators continued to soften, helping ratify the Bank of Canada’s cautiously hawkish, data-dependent stance. Data released by Statistics Canada this morning showed the Consumer Price Index rising 4 percent on a year-over-year basis in August, up from the 3.3 percent increase recorded in July, and slightly above consensus expectations. On a month-over-month basis, the change climbed to 0.4 percent – beating market forecasts that had been set closer to the 0.2 percent mark. Gasoline prices rose 4.6 percent month-over-month, and the energy sub-index...

10:45 EDT To sum up and close out today’s Bank of Canada action: – Markets are mostly convinced the Bank’s tightening cycle is done, and are now mainly concerned with adjusting bets on when the first rate cut might occur. Odds on a cut by January are creeping higher, but the consensus is anchored closer to mid-2024. – But policymakers cannot declare “mission accomplished” yet, and will need to maintain a rhetorically hawkish posture until the threat of an unwarranted easing in financial conditions has passed. – Two inflation reports, two jobs prints, a business outlook survey, and a number...