Canada’s November inflation numbers could quell the dovish tone from the Bank of Canada’s recent rate deliberations, an economist cautioned Wednesday.
The Bank of Canada on Wednesday released the summary of deliberations for its Dec. 6 rate decision. At that meeting, the central bank’s governing council concluded that “recent data pointed in the right direction” and said the odds of further interest rate hikes have fallen, the notes revealed.
This marks a dovish shift in tone from the Bank of Canada – but the deliberations took place before Statistics Canada released its latest inflation data, which showed the consumer price index held steady in November at 3.1 per cent, instead of declining as most economists had expected.
Eric Lascelles, chief economist at RBC Global Asset Management, said the new inflation numbers could prompt the Bank of Canada to reconsider its tone.
“Inflation came in hot, so that’s the counterpoint to all the dovish talk,” he told BNN Bloomberg in a television interview on Wednesday.
“It looks at least part of that hot inflation print was at least explicitly temporary.”
The November data showed travel offset some slower growth. Given travel’s typical fluctuations, that could mean inflation is not as sticky as the numbers suggest, Lascelles said, though he cautioned that more study is needed.
“It is fair to say there are some unanswered questions in the inflation space and we’re not reliably seeing numbers in the two per cent (range) right now,” he said.
December’s inflation data is scheduled for release on Jan. 16, while the next Bank of Canada rate decision is set for Jan. 24.
