While the Bank of Canada left its benchmark rate unchanged as expected today, markets instead turned their attention to the release of another hot inflation report out of the U.S.
U.S. CPI inflation was 0.4% in March, a repeat of the strong reading seen in February and part of an uptrend in headline inflation this year. On an annualized basis, inflation rose by a higher-than-expected 3.5%, leading to a surge in bond yields and a selloff in equity markets.
This is important due to the implications for both the Federal Reserve and in turn the Bank of Canada’s future monetary policy decisions.
“The March CPI inflation report is an unwelcome message to the markets that the Fed’s inflation fight is far from over,” noted BMO’s Scott Anderson.
As a result, rate cuts could very well get pushed out to later this year, or potentially even…
