Canada's Short-Term Yields Fall After April CPI Rises Less Than Expected, Says CIBC

10:26 AM EDT, 05/19/2026 (MT Newswires) -- The headline consumer price index accelerated in April as gasoline prices surged, but the jump wasn't as high as expected and core measures of inflation remained muted, supporting the current wait-and-see stance of the Bank of Canada, said CIBC.

Earlier Tuesday, Canada released April's CPI.

While price pressures may accelerate further ahead, the weakness of core inflationary measures as oil prices were initially spiking is an indication of the slack that exists within the Canadian economy, which will continue to put downward pressure on inflation components that aren't greatly affected by oil prices, said CIBC.

Because of that, CIBC continues to see the Bank of Canada holding interest rates steady at their current level throughout 2026.

Shorter-term bond yields fell on Tuesday following the CPI release as investors slightly reduced the magnitude of BoC rate hikes expected before the end of the year, although the move was muted compared with the spike seen last week, noted the bank.

Longer-term, or five-year and over, yields remained higher on the day, likely reacting to Tuesday's increase in global oil prices when Canadian markets were closed, it also noted.

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