Canada: Further Price Cooling Is Good News for Bank of Canada’s Pause Plans

Consumer prices climbed 0.5% in March to lower the annual rate of inflation to 4.3%. It was the first annual print under 5% since 2021 and the softest advance since August of that year. Base effects (including the impact of the policy-induced decline in childcare costs) helped the headline number, but the direction of travel remains encouraging. We still think that the central bank will move to cut borrowing costs towards the end of this year.