CANADA: Long-Term Consumer Inflation Expectations Offer Comfort But New Short Term Highs
Last updated at:Oct-17 15:06By: Chris Harrison
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- Despite lower gas prices, consumer inflation expectations for 1Y and 2Y ahead continued to edge up (1Y 7.1%, 2y 5.2%) in the Q3 survey conducted Aug 2-23 with follow-up interviews Sept.
- The 5Y ahead meanwhile fell back into its recent range as it pulled back from 4% (highest since 2Q18) to 3.44%, a move consistent with breakevens sitting close to pre-Ukraine war levels - chart.
- The latter will be of some comfort for the BoC but further elevated short-term expectations and the risk they become more entrenched gives scope for the BoC to hang a hawkish argument on.
