Rosenberg Research Says Canada's Core CPI Is "Benign" Despite Upside Headline Surprise

11:52 AM EST, 01/20/2026 (MT Newswires) -- The Canadian consumer price index data for December released on Monday showed a 0.2% month-over-month drop on a non-seasonally adjusted basis, which was a tad disappointing when benchmarked against the 0.3% consensus forecast slip, said Rosenberg Research.

The year-over-year headline inflation rate instead of staying at 2.2% rose to 2.4%, the base effects from last year's sales tax holiday are largely at play, noted Rosenberg. There was little market reaction to the data, but while the Bank of Canada may well stay on the sidelines for now, the fact that underlying inflation is staying relatively benign tells Rosenberg that the balance of risks remains towards more easing, not a tightening.

Rosenberg is still talking about inflation remaining in the BoC's official target range and a year-over-year real gross domestic product trend barely above zero at a puny 0.4%, while growth was 2.8% a year ago. Not to mention full-time job creation whittled down to a mere 0.7% year-over-year higher pace, less than half the year-ago trend of 1.8%.

At this point, it surely cannot be said that trade concerns have subsided, quite the opposite, in fact, Rosenberg noted.

Meanwhile, banking sector credit growth has slowed sharply to just a 3.6% year-over-year pace, led lower by a huge slowdown in personal loans. Ronsenberg praised the BoC's 275bps rate cuts since spring 2024.

There is no case here for the BoC to even think about raising rates and Rosenberg thinks the yield on the two-year Government of Canada (GoC) note should really be closer to 2.0% than the current level of 2.5%.

There is good money to be made being long the front end of the bond curve at present, it added.

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