"The data reinforce expectations the Bank of Canada will be on hold for an extended period"
-Camilla Sutton, head of currency strategy at Bank of Nova Scotia
Consumer prices in Canada slowed in April to its slowest in more than three years, taking it below the central bank's inflation target band and raising concerns of growing slack in the world's 11th largest economy. According to the Statistics Canada, the nation's inflation rate rose 0.4% in April from a year ago compared with a 1% annual gain the prior month, reaching the lowest level since October 2009, when the country was in a recession and experienced a period of deflation within the economy. The Bank of Canada now expects inflation to remain below its 2% target until the second quarter of 2015.
"The data reinforce expectations the Bank of Canada will be on hold for an extended period," said Camilla Sutton, head of currency strategy at Bank of Nova Scotia in Toronto, in a telephone interview.
"If not for globally low interest rates and an "expansive" view of the central bank's mandate, "these types of CPI numbers would arguably merit at least a hard look at measures to stimulate the economy via the interest rate channel," Derek Holt, vice president of economist at Bank of Nova Scotia (BNS) in Toronto, said in a note to investors.
© Dukascopy Bank SA