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Canadian CPI coming up next
The economic news that’s surprised me the most this week was the Bank of Canada’s business outlook survey. Every part of if was enthusiastic for the future: sales expectations, hiring and investment.
moment.
What was interesting in the survey was that changes in inflation were downplayed. The text of the survey emphasized that half of Canadian companies think inflation is transitory but the real headline there is that half of them think it’s not transitory. If I owned a company and half of my workers were asking for raises, I wouldn’t be so enthusiastic.
Perhaps that communication is all part of managing expectations and Macklem will come down with the hammer next week.
A final key input is today’s Spetember CPI report. The consensus is for a 0.3% m/m rise and a 4.3% y/y rise. The BOC has three core measures — median, trim and common. Watch for the direction of those.
I was a bit surprised by the underperformance of the loonie yesterday but it’s catching up today and a strong CPI number could close that gap.
