“Mixed Signals”: Economists Split on Bank of Canada’s Next Move After Latest Inflation Data

Following an unexpected slowdown in March inflation, a prominent Canadian economist stated he does not anticipate a rate cut from the Bank of Canada (BoC) this Wednesday. However, he projected cumulative easing of around 100 basis points (1%) over the remainder of the year.

Statistics Canada’s Tuesday report showed the Consumer Price Index (CPI) rose 2.3% year-over-year in March, down from February’s 2.6% increase and below Reuters’ consensus forecasts.

Yet core inflation metrics—closely monitored by the BoC—remained stubbornly high. The CPI median held steady at 2.9%, while the CPI-trim (excluding volatile components) stood at 2.8%.

The inflation release coincides with anticipated price pressures from newly imposed U.S. tariffs on Canadian goods and Ottawa’s retaliatory trade measures.

Jimmy Jean, Desjardins’ Chief Economist, told Bloomberg on Tuesday:
“The Bank of Canada faces significant policy ambiguity but wants to avoid repeating its 2022 mistake of dismissing inflationary pressures as transient. With inflation expectations surging in both Canada and the U.S., the BoC must tread carefully—which is why we expect a hold tomorrow.”

Jean forecasts approximately 100bps of rate reductions by the BoC in 2024, with the easing cycle concluding by year-end.

Contrasting this view, TD Deputy Chief Economist Derek Burleton suggested at the Verico EXPO conference that the BoC might implement a 25bps cut tomorrow, followed by potentially one more reduction this summer—barring major disruptions from U.S. election policies or global shocks.

The BoC’s next rate decision is scheduled for Wednesday, April 16.