FP Letters to the Editor: Inflation higher than Bank of Canada letting on
Financial Post - over 4 years
Re: “Top 5 takeaways from the Bank of Canada’s decision,” John Shmuel, July 17, online only
The latest press release from the Bank of Canada announcing that there will be no change in the overnight rate borders on the delusional when it states: “The bank expects total CPI inflation to remain noticeably below the 2% target over the coming year.”
If one looks at four-quarter rates of change, which filter out a lot of the noise in the 12-month rates of change, the inflation rate based on the CPI all-items index, the bank’s target indicator, has been above 2% since 2010 Q4. As recently as 2011 Q3 it was at 3%, supposedly the upper bound of inflation for the bank, when one would expect it to tighten the screws. The most recent inflation rate, for 2012 Q1, shows a 2.4% inflation rate, not noticeably below but noticeably above the 2% target rate.
The 2012 Q2 rate is likely to come in at under 2%, but one can’t be sure until the June 2012 CPI update is released on Friday. In any case, t
Financial Post article