Bank Of Canada Inflation on it’s Peak

Bank Of Canada deputy governor said that obvious inflation is high but it is still far form being too high.
Despite CPI has fallen to 7.6% y/y from 8.1% and core CPI is down to 6.1% from 6.2% y/y, the Canadian dollar was higher on the day but it also depends on which metric we are looking at, as two out of the three inflation measures the BOC’s prefer the increase. Common CPI hit the record high and also upwards from June.

Common CPI increased to 5.5% from 4.6%. CPI median rose to 5% from 4.9%y/y. CPI trimmed mean fell to 5.4%y/y from 5.5%. Core CPI increased to 0.5% m/m from 0.3%.

For the prices to return to previous levels, there is a need of deflation of double-digits. However, what we are now seeing is single digits disinflation. Prices are still rising but not as fast as they were before. So in reality expensive nutshell, once the reality is accepted about the high prices staying for a while, equity markets may lose some steam or top out. And that applies to all regions.

The BOC is expected to increase 25bp hike in September. Which is on 7th September 2022, then 26th October 2022 and then on 7th December 2022.