The February CPI release met expectations, and the March CPI is anticipated to be around 2.5%. The data from February has influenced the outlook, particularly with a gradual decrease in shelter inflation expected.
There is currently no strong evidence that consumer prices are impacted by tariffs. The governing Council acknowledges a variety of potential outcomes, with plans to return to a single economic projection once uncertainty diminishes.
Market Trends And Monetary Outlook
Recent movements show the USDCAD is below its 100-hour moving average, with support noted at the 61.8% retracement level. The April Monetary Policy Report may reflect a range of possible outcomes, rather than a singular forecast.
The data from February provided little in the way of surprises, aligning with expectations and reinforcing a general sense of stability. With inflation figures for March projected to hover around 2.5%, there is no immediate concern that price growth is accelerating at an uncontrollable pace. One area of note remains shelter inflation, which is anticipated to trend lower over time. This supports the broader notion that price pressures may ease without external shocks disrupting the trajectory.
Trade policies, particularly tariffs, have been a topic of discussion in policy circles, yet no concrete signs suggest they are filtering through to consumer prices. The absence of direct effects allows for a clearer assessment of domestic inflation drivers without layering on external cost pressures from policy measures. With policymakers considering multiple possible economic directions, the approach remains flexible. A return to a single, streamlined projection is expected once volatility in key indicators subsides. Until then, the emphasis will be on assessing conditions as they develop.
On the currency front, current market trends place the USDCAD below its 100-hour moving average, reinforcing a pattern that has drawn attention. Technical support has formed around the 61.8% retracement level, which may act as a barrier against further declines for now. Short-term movement in the pair will likely depend on economic releases and policy signals.
Policy Considerations And Future Outlook
With the April Monetary Policy Report on the horizon, expectations should be set for a presentation that acknowledges multiple potential scenarios rather than committing to one definitive path. Given the current uncertainty, policymakers are likely to maintain a risk-aware approach rather than signalling firm commitments prematurely.
