RBC Previews This Week's CPI, Central Bank Policy Meeting in Canada

07:13 AM EDT, 03/16/2026 (MT Newswires) -- It's a busy week ahead for Canadian economic releases, highlighted by the February consumer price index report on Monday and the Bank of Canada's interest rate decision on Wednesday, noted RBC.

RBC said the BoC will be watching CPI closely ahead of its policy decision. RBC expects a tick lower in February headline CPI growth to 2% -- right at the 2% inflation target -- which won't sway the BoC to move from the sidelines.

Recent inflation readings have been distorted higher by the GST/HST tax holiday a year ago, which temporarily lowered price levels, and the removal of the consumer carbon tax from energy prices last April, which continues to lower year-over-year energy prices, noted RBC.

RBC noted the BoC's "core" median and trim measures control for tax changes, and have also been drifting lower to 2.5% on average in January, albeit driven largely by moderation in shelter price growth. Core services, excluding shelter growth, were still above 3% year over year in January by the bank's count.

Pockets of price growth remain elevated, particularly groceries, still up almost 5% from a year ago in January. The drag from lower energy prices in recent months will reverse as oil prices spike higher due to conflict in the Middle East, pointed out RBC.

Recent labor market data shows mixed signals, with some near-term softness, but also with underlying conditions that support gradual improvement ahead, said RBC. It noted employment fell by 84,000 in February, adding to January's 25,000 decline, with full-time positions bearing the brunt of losses. The unemployment rate rose to 6.7% in February from 6.5% in January, though it remains below the Q4 2025 average of 6.8% and well below the recent peak of 7.1% in September.

As a result, RBC doesn't expect the BoC to make changes to the policy rate at Wednesday's meeting. The bank's base case forecast also assumes the policy rate remains unchanged for the remainder of 2026 as inflation continues to trend lower toward target.

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