OTTAWA - Canada's inflation metrics have shown a mixed bag of results today, with the headline Consumer Price Index (CPI) climbing to 3.4%. In contrast, the core CPI, which strips out volatile items and is often seen as a more stable indicator, recorded a year-over-year increase of 2.6%. However, on a monthly basis, the core CPI saw a decline of 0.5%.
Amid these figures, the Bank of Canada's specialized measures of inflation also presented diverging trends. The CPI-trim, which trims off the most extreme movements in prices, edged up to 3.7%. Meanwhile, the CPI-median, which shows the median inflation rate across CPI components, held steady at 3.6%. Both these measures are currently running above the central bank's inflation target of 2%.
The latest inflation data has significant implications for the country's monetary policy. With the headline CPI and other key inflation indicators remaining above target, the probability of an interest rate cut at the upcoming Bank of Canada meeting on January 24 has decreased. Market participants now assess the likelihood of a rate reduction at just 19%, signaling a shift in expectations as policymakers grapple with persistent inflationary pressures.
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