Bank of Canada's next move less certain after inflation rate ticks higher in May

OTTAWA — The annual inflation rate unexpectedly ticked higher in May, raising doubts about what the Bank of Canada will do when it makes its next interest rate decision in July in"bumpy and choppy" conditions.

TD Bank senior economist James Orlando said called the inflation report a disappointment as both core and overall inflation rose higher. The Bank of Canada's next rate decision is set for July 24 when it will also publish its latest outlook for the economy in its monetary policy report. Following the inflation report, financial markets suggested the odds that the central bank would cut rates in July were lower.

In addition to the June inflation figures, Statistics Canada will release its gross domestic product figures for April and its labour force survey for June. The Bank of Canada will also release its own business outlook survey and Canadian survey of consumer expectations on July 15. "But overall, is it enough to say, OK, we, we need to really step back completely from rate reductions — I don't think so."

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