, though they agree it should be sometime this year, according to a summary of deliberations that led to a decision to hold the key overnight rate at five per cent on March 6.“Members agreed that if the economy evolves in line with the bank’s projection, the conditions for rate cuts should materialize over the course of this year,” according to the summary released March 20.
Governing council members also noted that Canada’s mortgage renewal cycle means higher mortgage interest costs will have a “persistent, but not permanent” effect on CPI The central bankers acknowledged that shelter price inflation, which includes mortgage interest costs, rent and components related to home ownership, remained high at 6.2 per cent in January, and continued to be the biggest contributor to total CPI inflation.
The central bank’s preferred measures of core inflation that strip out volatile measures were both lower, at 3.4 per cent for CPI-trim and 3.3 per cent for CPI-median. However, both were still above three per cent when measured across 12-, six- and three-month periods. Economists at Toronto-Dominion Bank said it was the first time since 2021 that grocery inflation was below headline inflation. Year-over-year grocery prices increased by just 2.4 per cent in February compared to a 3.4 per cent rise in January.