CIBC Says Bond Yields Fall on Weaker CPI as Lowers Odds of Bank of Canada Hike This Year

12:11 PM EDT, 03/16/2026 (MT Newswires) -- Canadian bond yields fell as the downside surprises on Monday, lowered the odds of the Bank of Canada hiking this year, said CIBC after the release on the February consumer price index.

The "before" picture of Canadian inflation ahead of the oil price shock should give the Bank of Canada some comfort, as it looked tame overall, noted CIBC. Headline inflation decelerated to 1.8% year over year from 2.3%.

That was helped by base effects tied to last year's tax holiday ending, and reflected a 0.5% month-over-month non-seasonally adjusted advance, with that being a little softer than the consensus expectation.

The BoC's key core measures of trim and median, which weren't impacted by the tax holiday, matched the bank's forecast but were below the consensus expectation, as both decelerated to 2.3%, down from an average of 2.5% in the prior month.

While the before picture looked good, the after picture of inflation following the start of the war could show headline inflation accelerating to roughly 3% year over year in the coming months, added CIBC.

The magnitude and duration of the shock will be important for the BoC. However, the BoC will take comfort in the fact that core service prices are being contained by labor market slack and decelerating shelter costs, which should keep policymakers on the sidelines this year, according to the bank.

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