Market Wire, North America

Canadian headline inflation unexpectedly accelerated last month, and the underlying price indicators followed most closely by the Bank of Canada jumped – making a back-to-back rate cut at the central bank’s July meeting much less likely. Data released by Statistics Canada this morning showed the Consumer Price Index rising 2.9 percent on a year-over-year basis in May, up from the 2.7 percent increase recorded in April, and well above the 2.6-percent consensus expectation. On a month-over-month basis, prices increased 0.6 percent. The print incorporated new consumer price index basket weights, but the statistical agency noted that the headline gain would...

The Bank of Canada delivered a long-awaited rate cut this morning, and language in the accompanying statement set the stage for more easing to come at subsequent policy meetings – a regime shift that should add to momentum pushing the Canadian dollar lower. In the official statement setting out the decision, policymakers said “Overall, recent data suggest the economy is still operating in excess supply,” and “has increased our confidence that inflation will continue to move towards the 2 percent target”. Officials noted that consumer price growth has slowed, with three-month measures showing “continued downward momentum”. All of the Bank’s...