Monday Market Minute | Feb 26, 2024

Inflation holds at 2.8% — close to target but not close enough

What Moved

StatsCan reported February CPI at 2.8%, unchanged from January and still above the Bank of Canada's 2% target. Core measures — CPI-trim and CPI-median — edged lower but remained sticky in the 3.0–3.5% range. The BoC acknowledged progress but repeated that it needed "sustained evidence" of disinflation before easing. Markets maintained their June cut forecast.

Why It Matters

Sticky inflation kept the BoC on hold, extending the window of elevated yields for private credit investors while delaying the catalyst for PE and real estate repricing. The gradual disinflation path — rather than a sharp drop — suggested the easing cycle, when it arrived, would be measured rather than aggressive. Portfolio positioning favoured patience.

Signal to Watch

March and April CPI prints would be decisive. A break below 2.5% on headline inflation would all but guarantee a June cut, while any re-acceleration above 3.0% would push the timeline into the fall and reshape private market expectations.

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