Bank of Canada closer to inflation target, rate cuts than it thinks

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Cooler-than-expected inflation numbers have left one strategist even more skeptical of the Bank of Canada‘s conservative forecast for when the consumer price index will return to target, suggesting the door to interest rate cuts could open much sooner than the central bank has predicted.

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The Bank of Canada said in its January Monetary Policy Report that it doesn’t expect the consumer price index to come close to its two per cent target until 2025. But Taylor Schleich, a rates strategist at National Bank of Canada Financial Markets, said in note on Feb. 22 that there is a clear path to the two per cent target in the third quarter of this year.