Inflation has peaked but expect more rate hikes: Capital Economics
BNN Bloomberg
Capital Economics is estimating that inflation has finally peaked, but it also said that won’t be enough for the Bank of Canada to take its pedal off the metal in terms of hiking interest rates.
The latest inflation data for June showed consumer prices jumped 8.1 per cent on an annualized pace. However, there were “some encouraging signs in the data,” according to Stephen Brown, senior Canada economist at Capital Economics.
“The increase was smaller than the consensus estimate of 8.4 per cent and, while the large upward revision to CPI-common threw a wrench in the works, the [Bank of Canada] was probably still pleased to see that an average of the three core measures rose by only 0.1 percentage-point in June, the smallest increase in eight months,” he wrote in a note to clients Friday.
Brown also noted his own calculations indicated the CPI-trim index rose a more modest 0.3 per cent in June from the previous month – closing in on a level necessary for core inflation to eventually fall back toward the top end of the central bank’s inflation target range of one to three per cent.
