January 2023 Bank of Canada announcement | Page 3 | General financial discussion | Discussion forum

mordko said
There is “much of a stretch” because core, median, and trim CPI have shown consistent upwards trend.

Volatile gasoline prices did drop significantly due to Covid measures in China and warm winter but will jump again unless we see a recessions as energy supplies are a problem which can’t be resolved quickly. Its the large drop in energy prices which made headline inflation numbers look a bit better in recent months.

But… A serious recession would “help” with inflation. Presumably this is the most probable scenario now. Not particularly surprising. The bank was too late to act against inflation, which tends to result in a deeper recession when it is finally forced to.  

Core CPI was 147.3 in May of this year & ended the year at 149.2 so for the last 7 month of 2022 the core was up around 1.014% or 0.144% per month for those 7 months. If the core continues at that rate of increase over the next 5 months (I said if) the core will increase around 1.74% in the year from May 2022 to April of 2023. I think my math is a little off but not by much.

Mean CPI was 5.4 in May 2022 & ended the year at 5.3 so mean has actually decreased in the last 7 months. I'm too lazy to try & figure out what it would be in April of 2023 if the decrease continues at the same rate as the last 7 months but needless to say it would be a decrease over that one year time frame. I hope I have worded/explained this correctly to avoid the wrath of the correctness police but I'm sure I will hear from them if not.

AltaRed said
Anything calculated beyond one decimal point is noise at this point of shifts in trends so I think all one can do is see what monthly CPI data points tell us over the next 6 months or so.

What I will find even more amusing is how the media will 'mess its underwear' IF (and that may be a big IF) current trends continue and YOY inflation drops to near zero by June/July this year. Most of them likely won't have a clue how to communicate the information.

Even BoC will have a hard time explaining it to consumers, especially if it has to justify why it is not dropping interest rates as quickly as consumers think they should.

Rest assured this site will have multiple threads speculating on the matter.  

Rate cut is a shot in the arm of a dying economy due to severe recession or fear of it. Just because inflation goes back down to 2-3% does not warrant a rate cut at all. If inflation steady at 2% forever, so will the o/n rate, whatever the rate is.

savemoresaveoften said
Fed raises 25bps and remains hawkish.
Will see if that prompts the BoC to hike one more time in March.  

If I was a betting man after it was released that inflation slowed to 6.3% ,however freezing of some grocery prices have come off Feb 1st and expect even higher prices , the US Fed raised and said there will be more ,the BOC would be making a grave error not to raise again in March , and that still will not be enough. If they do pause expect the Canadaian dollar to fall which will even cause more inflation as most goods are bought from US

mordko said
The Feds move is in line with expectations, so nothing has changed to impact the “pause” forecast for Canada’s rate hikes. New information on inflationary pressures prior to the March announcement can impact the rates either way.  

Clearly if US rate is higher and Canada in the past has had a higher rate to support our dollar ,pausing will see our dollar fall and inflation increase . Seems to me its political pressure being put on BOC as many Canadians are in trouble and are pointing the finger at our current government and their policies , the rate should go up .5
This partly the BOC's fault they should have started raising rates last summer instead of waiting

The April BoC rate announcement is just out: No change. 4.5% continues.

You may return to life as it was.
RetirEd

BoC is predicting 3% inflation by mid-summer. Perhaps they are expecting a recession or for a bank or two to go bust.

Bill said
From today's announcement:

"CPI inflation eased to 5.2% in February"

In my view upcoming public sector union wage settlements could, along with labour shortages, set off a general wage spiral making the return to 2% anytime soon a fantasy, that's what I'm watching.  

Rate previously slowed to 5.9 per cent in January
Means that the Feds and unions did not spend/demand enough. They should have wasted 0.6% more. That way, they could still claim that inflation was decreasing while burning up every last penny possible.