Nomura Sees Bank of Canada on Hold This Year on CPI Moderation, Jobs Slack, Soft Growth

06:41 AM EDT, 03/17/2026 (MT Newswires) -- Canadian headline consumer price index slowed to 1.8% year over year in February from 2.3% in January, largely reflecting base effects from the GST/HST break -- which ended mid-February 2025, said Nomura.

Excluding the effect of indirect taxes, CPI rose 1.9% year over year. The Bank of Canada's preferred core measures averaged 2.3% year over year, the lowest since March 2021, with a broad range of core metrics cooling to within the 1% to 3% target range.

Shelter inflation eased to 1.5% year over year, the slowest since February 2021, driven by slower rent growth, subdued mortgage interest costs, and declining homeowners' replacement costs. Services inflation, which remained sticky in 2025, fell below 3%, reflecting slower price increases for cellular and financial services, noted the bank.

Despite noise from GST/HST-related base effects in January and February, data suggests price pressures are "moderating," stated Nomura.

With labor market slack persisting and growth soft, Nomura continues to expect the BoC to hold policy rates through 2026.

Canada's central bank is scheduled to release its next policy statement on Wednesday, at 9:45 a.m. ET.

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