Canada’s

inflation rate

and its underlying data have economists predicting it will be quite a while before the

Bank of Canada

moves the overnight interest rate.

On Monday, Statistics Canada reported that the consumer price index held steady at 2.2 per cent in November, though food inflation climbed at its fastest rate since December 2023.

Meanwhile, measures of core inflation showed signs of cooling.

Here’s what they had to say about November’s inflation data:

Bank of Canada ‘can take comfort’: Desjardins

Royce Mendes, managing director and head of macro strategy at Desjardins, said the Bank of Canada “can take comfort” in avoiding a stagflationary environment.

“We continue (to) believe that downside risks to the economy and inflation will be more pertinent over the next few months, with lingering uncertainty about

CUSMA [Canada-United-States-Mexico Agreement]

weighing on activity and fiscal stimulus not a major factor until later in the year,” he said in a note.

Overall, Mendes said the “only real fly in the ointment” is the rise in the number of categories in which prices increased more than three per cent.

‘Getting closer’: TD Bank

Leslie Preston, managing director and senior economist with TD Bank, said November’s CPI data underscores why the Bank of Canada has not focused on recent inflation trends.

“Underlying inflation is still above the two per cent target, but it is getting a lot closer in recent months,”

she said in a note.

“Looking ahead, Canadian inflation is likely to see some choppiness. December’s inflation will be boosted by comparisons to last year’s GST holiday. But overall, we expect inflation to moderate to the Bank’s target over the next year, as past inflation problem areas, like rents, continue to cool.”

Interest rates to remain flat in 2026: CIBC

Andrew Grantham, senior economist at Canadian Imperial Bank of Commerce, said that while many core measures of inflation are down compared to October, they are still too high for the Bank of Canada to cut rates, and may not be high enough for a hike any time soon either.

‘We continue to forecast the Bank of Canada to hold its overnight rate steady at its current level throughout next year,’ he said.

Rate holds coming, with room to trim: Rosenberg

David Rosenberg, founder of Rosenberg Research and Associates Inc., echoed the CIBC report and also anticipates interest rates to remain the same in the immediate future.

“The bond bears and policy hawks can take a chill pill,” he said. “The fact that the markets are pricing in the next (Bank of Canada) move as being a hike is frankly rather laughable.”

Inflation in the residential real estate market also gives the Bank of Canada room to trim if needed, Rosenberg added.

CPI rent inflation softened in the month to 4.7 per cent and the homeowner’s replacement cost deflated at a -1.6 per cent year-over-year rate.

Not as good as advertised: Bank of Montreal

Douglas Porter, chief economist at Bank of Montreal, said the November inflation numbers may not be as good as they seem, mostly because prices across more than half the core elements climbed more than three per cent in the month.

Porter also points out that inflation will average at just over two per cent for 2025 with this reading, down from an average of 2.4 per cent last year.

“Overall, though, the calming core metrics would fit with the view that the (Bank of Canada) will be comfortable on the sidelines for some time yet,” he said.

  • Food prices rise at fastest pace in two years, though inflation rate holds steady
  • Canada’s housing market stuck in ‘holding pattern,’ says CREA

‘Should quell rate hike talk’: Capital Economics

Stephen Brown, deputy chief North America economist with Capital Economics, said November’s inflation rate supports his view that interest rate hikes are not on the way, despite what the markets may think.

Brown called Canada’s 2.3 per cent three-month annualized rate “less concerning” and predicted that the country’s overall inflation rate may fall in line sooner than expected.

“That provides some support to our view that core inflation will be back at two per cent by the middle of next year, more than a year sooner than the Bank of Canada forecasts,” he said.

• Email: bcousins@postmedia.com