Forecasters expect this week's inflation report to show Canada's inflation rate fell last month, but financial markets are still unsure whether a June interest rate cut is in the cards for the Bank of Canada. Bank of Canada Governor Tiff Macklem waits to appear before the Senate Finance Committee in Ottawa on Wednesday, May 1, 2024.
But Porter said the central bank may need to see an even lower inflation print to be convinced to cut interest rates next month. But recent strong employment figures have shifted expectations away from an interest rate cut next month. That's made the upcoming inflation report particularly important for forecasters who are trying to solidify their rate calls.
Over the last few months, the Bank of Canada has been encouraged by the slowdown in price growth. Core measures of inflation have trended downward and high inflation has become less broad-based in the economy. “The short answer is, we are seeing what we need to see but we need to see it for longer to be confident that progress toward price stability will be sustained.”
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