Rosenberg Research Says Bank of Canada Should Be Cutting Rates

09:00 AM EDT, 03/17/2026 (MT Newswires) -- Before the effects of the war in Iran showed up, Canadian inflation was a "non-event", says Rosenberg Research after the release yesterday of the CPI figures for February.

"Then again," the research asks, "with employment contracting, why would anyone expect the demand side of the economy to be triggering any price inflation?"

On Monday's data, Rosenberg Research notes the CPI on a non-seasonally adjusted basis came in at 0.5% month over month in February, and that undercut the consensus estimate of 0.7%. It also notes the headline inflation rate came "tumbling down" to a seven-month low of 1.8% year over year from 2.3% in January, and that too came in below market views of a 1.9% print. Core inflation also receded to 2.0% year over year from 2.4% and was a tad below the 2.1% year over year expectation.

According to the research, inflation metrics at or below the Bank of Canada's target, along with a labor market building more slack, "deserve a dovish, not hawkish", BoC policy setting.

"We shall see what it says on Wednesday," says the research, noting Canada's central bank is slated to release its policy statement and give a press conference then.

Rosenberg Research notes the median inflation rate also edged lower to +2.3% from +2.5% (Rosenberg consensus was +2.4% YoY), and it said that speaks to the widening dispersion in Canada's disinflation momentum. In fact, it adds, it has been +0.2% MoM or lower now in each of the past five months, and in 10 of the past 11. "Can Tiff Macklem really ignore this?," it asks.

The research says: "All of the anxiety at the central bank level from the trade conflict never reared its ugly head. And that attests to the power of the disinflationary output gap in an economy where aggregate supply is running ahead of aggregate demand."

It adds: "There is no construct, in theory or practicality, that leads to an inflationary outcome in this overall macro environment. And that also includes the impact of the war over in the Middle East -- any spike in energy and related prices merely hits the wall in the labor market, and all we end up with is contracting real incomes and spending power. Let's hope that the decision makers at the Bank of Canada put their PhDs in economics to use this week and shift back to a dovish posture, especially considering that a money market with no such level of academic sophistication seems to now believe the next move is going to be a rate hike."

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