Two Canadas in one number.
Written by
Oliver Summers
The print
Headline CPI printed 3.0%, driven almost entirely by petrol. Core trim was unchanged at 1.9%.
Why it matters
There are two Canadas in this number. The headline looks inflationary and will make headlines. The core measure — the one the Bank of Canada sets policy against — is comfortably inside the band and did not move.
A hold remains fully priced, and correctly so. Nothing in this release changes the path.
The case
No trade. The headline is loud enough to move price intraday, but there is no case to build around the next rate decision, and this desk does not trade noise.
Published because a report that says "no trade" is worth the same as one that says otherwise.
What would prove this wrong
If core trim moves out of the band on the next print, or the BoC signals it is weighting headline over core, this read is wrong and Canada becomes tradeable.