**As seen in Risk In The Week report 04/14/24, subscribe at cablefxm.co.uk/reports
Canada headline consumer prices eased to 2.8% Y/y in February, the reading came 3/10s of a percent below economists' expectations. The 3m average of trim/median core metrics slowed to 2.23% Y/y from 3.12%, and CPI excluding shelter prices dipped to 1.3% Y/y from 1.5%. While headline readings stand within the BoC's target band, February core metrics are proving sticky and stand slightly above the mandate. Also worth noting, a divergence from U.S. price dynamics seems to be forming as the neighboring country has topped forecasts in 1Q, while Canada is coming below. Long-term headline CPI readings in Canada are strongly correlated to the U.S., however, this shouldn't provide any hints to the future direction of price trends. In recent months, it has been the U.S. diverging from G10 inflation readings as the economy has remained stronger than expected.
March CPI forecast range goes from 2.5% to 3.0%, J.P. Morgan pencils prices rising at 3.0% while Citigroup sees the reading at 2.9%. Economists at Scotiabank stand at the top of the range at 3.0% Y/y and 0.7% M/m, they added that it is premature to start adjusting for BoC easing bets and see a rebound in the core gauges after the prior two months. Scotiabank warned that price softness seen in January and February had little to do with tight monetary policy and more to do with the federal government programs, disruptions in data, and unusual weather. Scotiabank criticized BoC's recent communications of a June rate cut as the that the central bank is being too sensitive to short-term data, the desk warned that the softness in prices could be an anomaly. Analysts at BofA expect the BoC to ease rates in June, they see the central bank moving before the Fed and more aggressively
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