RBC Capital Markets Expects April CPI To Accelerate; Says H2 BoC Hike Odds Exceed Chance Of Cut

03:42 PM EDT, 05/15/2026 (MT Newswires) -- RBC Capital Markets said Tuesday's April CPI report will be the highlight for next week, with the headline print likely to accelerate while broader price pressures should remain contained.

In its CAD Weekly Soundbites report, RBC said it and consensus expect April CPI to rise 3.1% year-over-year, compared with 2.4% previously, as headline price pressures should escalate from higher energy costs.

The bank added that retail sales data due Friday should show "firm gains" consistent with Statistics Canada's flash estimate of 0.6%, while excluding autos, retail sales could rise almost 1%.

"The consumer was resilient in 2025 (consumption growth +2.3%), particularly in the face of trade uncertainty and the massive population growth shock, and that momentum is carrying into Q1," RBC said.

RBC said it sees the Bank of Canada on hold in 2026, with hikes in 2027, but added that "the chance of H2 hikes far exceeds the chance of a cut."

"Market pricing for 2026 rate hikes edged higher (50bp priced in) this week and 10y bond yields jumped to the highest since 2024 on higher oil and global bond market dynamics," the bank noted.

RBC added there are "inflation and growth cross-currents to manage" but said that "if push comes to shove the BoC will prioritize inflation, even if it means hiking into a squishy growth backdrop."

The bank also said USD/CAD remains trapped in its expected 1.3500-1.3900 trading range for the coming months, with the bias "currently skewed towards the top of that range."

On the global front, RBC highlighted next week's flash first-quarter GDP data in Japan, employment data in the UK and Australia, CPI reports in the UK and Japan, flash PMIs in the UK, Euro area and US, and UK retail sales. The Federal Reserve will also publish minutes from its April meeting, while Nvidia is scheduled to report earnings Wednesday.

On technicals, George Davis of RBC said the break above "very strong support (3.62%) has prevented a potential triple top from forming and shifts the focus up to 3.71% and 3.78%."

"The 2024 high (3.88%) serves as additional support. A return below 3.47% is required to nullify the topside risks," Davis added.

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