Canada’s core inflation rate rose beyond Bank of Canada expectations to 2.1 per cent from 2 per cent but the central bank is unlikely to move up its target date for raising interest rates, a top economist said.
“This marks a number of months in a row where core interest rates were running faster than the bank expected,” said Douglas Porter, deputy chief economist with BMO Capital Markets.
“Underlying inflation has been a bit higher than the bank expected and combined with a lot of the strong data we have seen recently in Canada just ramps up the odds of the bank of Canada starting to hike interest rates in the second half of the year (as expected),” he said.
Strong economic data has resulted in the dollar approaching 99 cents throughout the week and we could hit parity if retail sales figures also surpass expectations, Porter said.
The report showed that consumer prices in the Ontario were slightly above the national average during the last 12 months, due primarily to higher gasoline prices, passenger vehicle insurance and the purchase of passenger cars.
