10 Jul 2014
BoC to remain concerned on downside risk to inflation - Nomura
FXStreet (Bali) - Despite the rebound in Canada's inflation in recent months, Nomura suggests that BoC is likely to continue to express concerns about the downside risk to inflation.
Key Quotes
"After spending several months well below the BoC’s 2% target, inflation, both total and core, has rebounded in recent months, with total inflation standing at 2.3% y-o-y and core inflation registering 1.7% y-o-y in May."
"However, the increase in inflation is mainly the result of price increases in a small set of sub-components including energy prices, food prices, motor vehicle costs and other components that are little influenced by the level of excess supply."
"We believe that total inflation may have peaked and that the increase in core inflation will slow in the second half of this year. While inflation came in higher than the BoC forecast, likely leading to an upgrade of its inflation forecast in the next MPR, we believe that because inflationary pressures are not broad-based the BoC is likely to continue to express concerns about the downside risk to inflation."
Key Quotes
"After spending several months well below the BoC’s 2% target, inflation, both total and core, has rebounded in recent months, with total inflation standing at 2.3% y-o-y and core inflation registering 1.7% y-o-y in May."
"However, the increase in inflation is mainly the result of price increases in a small set of sub-components including energy prices, food prices, motor vehicle costs and other components that are little influenced by the level of excess supply."
"We believe that total inflation may have peaked and that the increase in core inflation will slow in the second half of this year. While inflation came in higher than the BoC forecast, likely leading to an upgrade of its inflation forecast in the next MPR, we believe that because inflationary pressures are not broad-based the BoC is likely to continue to express concerns about the downside risk to inflation."