Inflation returned to Canada in December, as two of the Bank of Canada’s (BoC’s) core measures of underlying inflation, CPI-trim and CPI-median, accelerated. The three-month annualized rate of the two rose to 3.6 percent from an upwardly revised 2.9 percent in the prior month.
The country’s annual inflation rate rose as expected in December, and underlying price pressures remained the same, dashing hopes that the central bank would shift into rate-cut mode early this year. Annual inflation rose to 3.4 percent in December, up from 3.1 percent in November. On a monthly basis, consumer prices matched expectations as well and fell 0.3 percent from November.
The BoC will hold its next interest rate announcement on January 24, when it is expected to keep its key policy rate on hold. Following the data, odds that the BoC would begin cutting rates in March fell from 50 percent to 33 percent, but there is still a high chance of a 25-basis-point reduction in April.
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