Canada Inflation Slows to 2.7%, Boosting Rate Cut Odds

👉 Key Highlights:
📍 Canada's annual core inflation eases to 2.75% in April.
📍 Headline CPI rose 2.7% year-over-year, down from 2.9%.
📍 Three-month moving average of core inflation increased to 1.64%.
📍 Traders increase bets on June rate cut to 60%.
📍 Loonie weakened by 0.24% post-release.
📍 Canadian government bond yields fell by seven basis points.
📍 Mortgage interest costs rose 24.5%; rents increased 8.2%.
📍 Excluding shelter, CPI rose 1.2% year-over-year.
👉 Context/Background:
Canada's inflation data for April indicates a continued slowdown in core inflation, suggesting that the Bank of Canada may begin an easing cycle soon. This follows multiple months of decelerating inflation rates, aligning with policymakers' conditions for rate cuts.
👉 Why This Matters:
📍 Signals potential monetary policy shifts impacting financial markets.
📍 Lower inflation may alleviate cost pressures on consumers and businesses.
👉 Market Insights:
📍 Expectations for a June rate cut increased due to easing inflation.
📍 Canadian bond yields and currency movements reflect market sentiment.
👉 Expert Statement:
🗨️ "While the market still seems somewhat hesitant to fully commit to a rate cut in June, we see the latest inflation data as enough for the Bank of Canada to begin a gradual easing cycle at its next policy announcement," - Royce Mendes, Director of Macro Strategy, Desjardins Securities.
👉 Impact & Recommendations:
📍 Investors should watch for the Bank of Canada’s next policy meeting for potential rate cuts.
📍 Businesses and consumers can expect potential relief from high borrowing costs if rate cuts occur. $The Toronto-Dominion Bank(TD.CA)$ $Bank of Nova Scotia(BNS.CA)$ $Royal Bank of Canada(RY.CA)$