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Surprise inflation hike won't knock Bank of Canada off sidelines, economists say

On Monday, Statistics Canada said annual inflation rose to 2.4 per cent in December, the Bank of Canada's last full data point before its January 28, 2026 rate decision as markets priced an 84 per cent chance of a hold.
Driven by Ottawa's temporary GST tax holiday, Statistics Canada reported December's inflation rose to 2.4 per cent Monday, with Preston noting 'overall, December's data is consistent with our expectation for inflation to moderate to the bank's target over the next year... as past inflation problem areas, like rents, continue to cool.'
Andrew Grantham, senior economist at CIBC, said `And today's inflation numbers don't change that picture`, noting core inflation metrics showed moderation despite the headline surprise.
The Bank of Canada, having held rates at 2.25 per cent, is expected to maintain this stance through 2026, as December's inflation data are unlikely to prompt immediate change.
Surveys showed trade-related uncertainty and tariffs weighed on confidence while RBC expects food inflation to top five per cent amid higher restaurant, grocery and travel costs.

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Surprise inflation hike won't knock Bank of Canada off sidelines, economists say

Inflation closed out 2025 with a surprise uptick, but economists weighing in Monday argued there was little cause for concern under the hood to warrant a change in interest rates from the Bank of Canada later this month.

17 hours ago·Kelowna, Canada

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