Underlying Inflation Is "Screaming" for A More Dovish Bank of Canada, Says Desjardins

12:25 PM EDT, 05/19/2026 (MT Newswires) -- Having had nightmares about another round of persistently high inflation, Canadian monetary policymakers can now rest easier after Tuesday's consumer price index for April, said Desjardins.

Tuesday's CPI data suggest that underlying price pressures remain extremely muted, noted the bank.

The bias-adjusted median and trimmed mean measures of Desjardins now point to an average annual rate of just 1.6%, well below the simple average of 2.1% for the unadjusted measures. The bias-adjusted measures of inflation the bank has developed do a better job of accounting for skew in the distribution of price changes, it stated.

The last time the gap between the bias-adjusted and unadjusted metrics was this wide in early 2024, it confirmed the Desjardins thesis that the Bank of Canada was set to embark on an "aggressive" easing cycle.

While rate cuts aren't yet on the table, market-implied pricing for two rate hikes seems misplaced, added the bank. An honest assessment of underlying inflation would have the BoC turning more dovish.

With the unemployment rate elevated and savings diminished, higher gasoline prices may be chewing through household finances in a way that reduces spending and inflationary impulses in other categories, according to the bank.

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