Going into the Bank of Canada meeting it was not expected to be an eventful meeting. The Bank of Canada had indicated already it would be holding rates at current levels and there was no significant data prior to the meeting to indicate a shift from that strategy. The meeting was as expected with a few takeaways to note. The key point is, unsurprisingly, how the BoC is viewing its battle against inflation.


The Governing Council notes recent indication that inflation is falling and inflation is expected to fall to around 3% by this summer. However, the BoC recognised that core inflation around the world remains stubbornly high and that services, in particular, are showing inflationary pressures. This is due to the fact that the service rebound post-Covid is still working its way through global economies. During Covid, people wanted manufactured products. Post-Covid people want to use the services previously denied to them.

Next inflation print is on Tuesday April 18 at 13:30 UK

The headline inflation print is expected to fall to 4.1% down from the 5.2% print in February, so inflation is falling and expected to keep falling. The core median print (the BoC’s preferred measure of inflation) is expected to fall to 4.8% from 4.9%.

The obvious trade to look out for is if inflation comes in surprisingly high which would support the CAD on expectations of further rate hikes from the BoC.

The key areas to watch

The BoC is trying to move the inflation level back down to 2% and service price inflation, a tight labour market, and corporate pricing behaviour yet to normalise are the key areas the BoC is looking at. The CAD on the index level remains within a range from the start of the year, but high inflation and higher oil prices would likely see CAD move back up to the higher end of the range marked below.