There’s certainly no shortage of reasons why the Bank of Canada could start to think about higher interest rates.
However, Canada’s central bank may hold the one trump card allowing them to withstand the higher rate talk: the muted levels of inflation in this country.
In April, the rate of inflation climbed by an annualized pace of just 1.6%, and far from levels of its G7 peers like the United Kingdom at 2.7% and the U.S. at 2.2%.
Also included among them, the Euro Area, seeing collective inflation at 1.9%.
As most of the major categories saw only modest gains or even declines in some instances, inflation pulled higher by the outlier of gasoline prices, which were up 9.5% from a year ago.
This is what’s buying the Bank of Canada time, but with higher levels of inflation in the economies of our major trading partners, time could be limited.