- The BoC’s preferred core inflation gauges, such as trimmed mean and weighted median CPI, surged in May, indicating a reacceleration of underlying inflationary pressures.
- Core services inflation, including shelter costs, remains very high. Shelter inflation is broadening, with rents continuing to soar and other drivers of shelter costs entering a new phase.
- Categories that previously contributed to disinflation, such as travel tours, accommodation prices, and food prices, reversed higher, suggesting that earlier disinflation may have been temporary.
- The BoC’s decision to cut rates seen as a policy error because it violated forward guidance and reacted prematurely to only four months of soft core inflation after a prolonged period of missing inflation targets.
This article was written by Arno V Venter at www.forexlive.com.
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