Canada: December CPI slips under the radar ahead of January BoC – TD Securities

"CPI inflation was unchanged at 2.2% y/y in December, in-line with TD's forecast and slightly below the market consensus," noted TD Securities analysts.

Key quotes

"The index was unchanged on a m/m basis, as sharply higher airfares offset broader seasonal weakness. The average of the Bank's three core CPI measures edged lower due to unfavourable base effects."

"The downside surprise on inflation fits neatly with the recent string of disappointing data releases in Canada, but with headline and core inflation metrics both slightly above 2% it will be met with a shrug in Ottawa. We (and the Bank) remain focussed on the real activity figures."

"Rates: We saw a muted market reaction, which makes sense with BoC meeting today at 10:00 ET. We feel the BoC's growth forecasts are more important than the current headline CPI level."