Market reaction has been muted to today’s Canadian CPI data, as the headline number came in close to expectations, offering little guidance to market watchers on the direction of interest rates. The Canadian dollar remained relatively weak, trading within a range of 72.78 cents US to 73 cents US, even after Statistics Canada’s CPI announcement. The report seems to add another nail, if not the final one, in the coffin of potential additional rate hikes. However, analysts caution that the Bank of Canada (BoC) is still far from considering rate cuts, with mid-2024 being the earliest anticipated date.
Later this afternoon, Deputy Prime Minister Freeland will release the fall economic statement. The government is expected to strive for a balance in keeping federal debt under control, contributing to inflation reduction while responding to the growing number of Canadians pressured by higher interest rates. As a result, the markets are not expecting much of substance from this development.
The Canadian dollar is currently trading at 1.3683 CAD against the US Dollar.
