CAD Slightly higher inflation, but no cause for concern – Commerzbank

Canadian inflation figures for October, published yesterday, were slightly higher than expected. At a seasonally adjusted 0.3 percent, the month-on-month rate was at the upper end of the range in which inflation has fluctuated over the past 14 months, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

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“However, there is no reason to worry that inflation will now return to the fore. The 2% headline rate is right in the middle of the target range, and the Bank of Canada (BoC) is unlikely to react until we see several months of such high inflation rates.”

“One thing yesterday's figures did show, however, is that those who feared that inflation would soon undershoot the target by a significant margin were dealt a blow. There is therefore still a strong case for further rate cuts, especially in view of the weakening real economy, but even faster rate cuts are probably not appropriate (yet).”