CAD September CPI – A No-Brainer Next Week

Today’s CPI is the last major data point before next week’s Bank of Canada decision, and it certainly means they will cut the policy rate.

 

The numbers: 

 

• YoY CPI 1.6% (1.8% expected)
  • The main driver of the decline in headline inflation was a YoY drop of 10.7% in gasoline prices
• The YoY average of the two core measures came in at 2.35% (2.4% expected)
  • The YoY pace of rent increases slowed from 6.2% in June to 5% in September

 

The implications: 

 

For Governor Macklem and Co. the only debate is whether to cut by 25bps or 50bps.

 

Bond traders think there is a 75% chance of a jumbo cut as they have driven yields 6 to 7 bps lower.