Canadian Inflation & The World Wide Web
Canadian CPI clocked in at 4.8% for 2021. The last time it was this high was 1991, the year the internet was made available to the public.
While life without the internet would be a struggle, most of us could do without high inflation.
The number will do little to comfort the Bank of Canada.
· There is a distinct possibility that they start hiking rates next week.
· If not next week, then we expect lift-off to commence in March.
· The door is now open for the BoC to consider quantitative tightening (i.e. reducing their balance sheet)
Even after the recent moves in yields, the bond market still clings to the view that inflation will ease later this year.
If lower inflation does not pan out, the risk is that interest rates continue to rise.