BMO Says Bank Of Canada Will Like Latest Core Inflation Data

07:15 AM EST, 02/18/2026 (MT Newswires) -- Canadian inflation readings have been somewhat "messy" for more than a year now, owing to a variety of tax changes -- notably the removal of the carbon tax in April 2025 and the GST holiday just over a year ago, said Bank of Montreal (BMO).

One measure of core neatly removes all those issues at a stroke: the consumer price index excluding food, energy and indirect taxes, and it just dipped below 2%, noted the bank.

The downside of this measure is that it removes food entirely, arguably the biggest pain point for consumers, stated BMO. The flip side is that it also takes away the somewhat offsetting deep dive in

gasoline prices over the past year.

It just so happens that this measure of core has one of the best fits with the Bank of Canada's policy rate over the past 20 years, leading it by about 6-12 months. While it's not giving a green light to further rate cuts just yet, it's moving in the right direction again, added the bank.

At the least, the retreat in core inflation trends should quell talk of rate hikes any time soon, such as in 2026, according to BMO.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.