Market Wire, North America

Headline Canadian inflation slowed last month, but underlying price indicators rose by more than forecast, raising monetary policy expectations for the months ahead. Data released by Statistics Canada this morning showed the Consumer Price Index rising 6.8 percent on a year-over-year basis in October, with the month-over-month change hitting 0.1 percent – narrowly exceeding consensus economic forecasts for a flat print. Gasoline prices tumbled -3.6 percent month-over-month while food prices underwent their typical November acceleration, climbing 1.2 percent. Shelter costs kept climbing, up 0.6 percent month-over-month as higher interest rates took their toll. Mortgage interest costs increased on a year-over-year...

The Bank of Canada lifted its benchmark overnight rate by half a percentage point to 4.25 percent this morning, while telegraphing an imminent pause in its monetary tightening cycle. The decision surprised markets that had anticipated a smaller quarter point move – but softened the blow by lowering expectations further out. In the statement accompanying the decision, the central bank said “growth in the third quarter was stronger than expected, and the economy continued to operate in excess demand,” observing that “Canada’s labour market remains tight, with unemployment near historic lows”. Signs of a slowdown were flagged: “While commodity exports...