TD Sees Bank of Canada Keeping Rates Unchanged Next Week as Core Inflation Forecast to Stay Close to Target

09:59 AM EDT, 04/20/2026 (MT Newswires) -- Canadian headline consumer price index inflation jumped up to 2.4% year over year in March, slightly less than consensus expectations, said TD after Monday's CPI data.

Higher energy prices were a big part of the story, with inflation excluding energy up a more "modest" 2.2% year over year, noted the bank.

Prices at the pump soared 21% month over month in March -- the largest increase on record.

Higher oil prices boosted Canadian inflation in March, pointed out TD. Oil prices have fallen in recent days but remain nearly 40% higher than a year ago. That means energy prices are likely to keep headline inflation elevated for some time.

April's inflation reading is likely to head much higher as the dampening effect of the removal of the consumer carbon levy falls out of the year-on-year inflation calculation, stated the bank.

Given a generally soft economic backdrop in Canada, TD expects the effect on core prices to be "more modest." Core inflation is expected to stay reasonably close to the 2% target on a year-on-year basis this year.

The Bank of Canada is widely expected to leave its key policy rate unchanged at 2.25% at next week's policy announcement. The bank will be listening closely for the BoC's assessment of the impact of the spike in oil prices on Canada's economy.

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