By Paul Vieira
OTTAWA--February's inflation report, showing a second consecutive surprise deceleration in price growth, was a "very encouraging" development, a senior Bank of Canada official said Thursday.
At an event in Toronto, Deputy Governor Toni Gravelle cautioned that this was a single data point, and senior officials are "going to look under the hood of the data, try to understand what it means in aggregate across previous consumer-price index numbers and other macroeconomic data."
He said the analysis of the CPI data -- which showed inflation slowed to 2.8% in February, from 2.9% in January -- would be part of a fresh quarterly forecast to be presented with the central bank's rate-policy decision on April 10. Markets expected inflation in February to accelerate to 3.1%. The central bank sets rate policy to maintain 2% inflation.
Following the release of the February data, economists and traders ramped up their expectations that the Bank of Canada would begin cutting its policy rate, now at 5%, in June. Analysts expect officials to hint in its April decision that policy easing is imminent.
The Swiss National Bank on Thursday became the first wealthy country to reduce interest rates since central banks started their campaign two years ago to tame inflation.
Bank of Canada minutes released this week, covering the deliberations ahead of the March 6 decision to keep rates unchanged, suggested officials believed rate cuts would occur this year, although senior officials disagreed on the timing.
Gravelle was in Toronto to deliver a speech outlining how the central bank intends to stick to the original parameters of its quantitative-tightening plan, which is an effort to reduce excess reserves on its balance sheet.
Write to Paul Vieira at paul.vieira@wsj.com
(END) Dow Jones Newswires
03-21-24 1122ET
