UBS Doesn't Think Higher March Inflation Will Tip The Bank of Canada Toward Tightening Policy

11:53 AM EDT, 04/16/2026 (MT Newswires) -- The Bank of Canada (BoC) has signaled a willingness to look through the energy-driven pick-up in headline inflation, said UBS.

However, the key thing the BoC will be watching will be the breadth of inflation pressures, which could widen a touch in the March print, but should remain similar to that seen in recent months and in line with the pre-pandemic period, wrote the bank in a note to clients.

Canada's central bank will also be focusing on its preferred measures of core inflation, both of which UBS expects to remain at 2.3% year over year in March.

With this, the bank thinks that the March inflation data is unlikely to tip the BoC toward tightening policy and there would need to be a broader-based rise in price pressures to warrant a quick shift in the policy stance.

UBS expects the BoC to remain on hold this year despite the current market pricing for +30bps of hikes.

Statistics Canada is slated to release the March consumer price index on Monday.

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