BMO on The Day, Week Ahead in Canada

07:46 AM EDT, 03/16/2026 (MT Newswires) -- The Canadian consumer price index report is the key piece of data due at 8:30 a.m. ET on Monday, noted Bank of Montreal (BMO).

Despite BMO's call for a "sizeable" 0.6% month-over-month headline gain, it said an even larger increase a year ago means that inflation will actually lead to a fall of half a percentage point to 1.8% year over year. The bank recalled that last year's move was driven by the end of the GST/HST tax holiday which boosted prices.

BMO noted gasoline prices jumped 4.5% in the month, and look to climb at least that again in March -- even if Middle East tensions ease. Heating oil also saw a big increase in the month.

Other seasonally strong categories include household furnishings/equipment, with appliances tending to push higher, while airfares and travel services are usually firm as well. Shelter is expected to provide a modest offset, as falling home prices continue to weigh on the category, BMO noted

Core inflation -- CPI Trim & Median -- is expected to be flat to a tick lower, continuing the decelerating trend in place over the prior few months, said BMO. The base effects for the six-month annualized rate is a bit more challenging again, so progress on that metric could stall.

Still, underlying inflation is moving toward the Bank of Canada's 2% target, which is welcome news. Other core measures look to slow as well, with CPIX (which excludes taxes) easing to 2.4% year over year and CPI excluding food and energy (includes taxes) slowing to 2.0% year over year.

With plenty of volatility and uncertainty around the impact of the conflict in the Middle East, Monay's isn't likely to move the needle for the BoC, added BMO.

Investors will also get on Monday housing starts for February at 8:15 a.m. ET, which look to rebound to 260,000 annualized units in the month and at 8:30 a.m. ET there will be the national balance sheet accounts for Q4.

The BoC is widely expected to hold policy rates steady at 2.25% at Wednesday's policy announcement, according to the bank. The outbreak of conflict in the Middle East prompted oil prices to surge, causing a major shift in the macro backdrop and creating greater uncertainty.

Even absent the conflict, Canada's central bank was likely to be on an extended pause, so little has changed for this meeting other than the context of the Governing Council's discussions. What has changed is the risk skew, as the BoC had been leaning ever so slightly to the dovish side, while an energy price boost to inflation likely puts any potential further easing on the shelf for now, said BMO.

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