{"id":30809,"date":"2026-03-16T16:59:03","date_gmt":"2026-03-16T16:59:03","guid":{"rendered":"https:\/\/www.vtmarketsglobal.com\/en\/uncategorized\/30809\/"},"modified":"2026-03-16T16:59:03","modified_gmt":"2026-03-16T16:59:03","slug":"february-saw-canadas-annual-cpi-ease-to-1-8-below-forecasts-monthly-prices-rose-0-5","status":"publish","type":"post","link":"https:\/\/www.vtmarketsglobal.com\/en\/live-updates\/30809\/","title":{"rendered":"February saw Canada\u2019s annual CPI ease to 1.8%, below forecasts; monthly prices rose 0.5%"},"content":{"rendered":"Canada\u2019s Consumer Price Index rose 1.8% year on year in February, down from 2.3% in January and below the 2.1% forecast. Prices increased 0.5% month on month.\n\nThe Bank of Canada\u2019s core CPI rose 2.3% year on year and 0.4% month on month. Other gauges eased: Common CPI was 2.4% (from 2.7%), Trimmed CPI 2.3% (from 2.4%), and Median CPI 2.3% (from 2.5%).\n\nStatistics Canada linked the slower annual rate to a base effect tied to the end of the GST\/HST break partway through February 2025. That one-off monthly rise dropped out of the 12-month comparison in February 2026.\n\nThe CPI release was scheduled for 12:30 GMT, ahead of the Bank of Canada\u2019s 18 March meeting, where the policy rate was expected to stay at 2.25%. Earlier estimates looked for February CPI at 2.1% year on year and core CPI at 2.4% (after 2.6%).\n\nAfter the data, the Canadian dollar strengthened and USD\/CAD moved below 1.3700 amid a broader US dollar pullback. Levels cited included 1.3750, 1.3752, 1.3800, 1.3810 and 1.3928 on the upside, and 1.3525, 1.3504 and 1.3481 on the downside, with RSI near 59 and ADX near 14.\n\nThe February inflation report showing a drop to 1.8% has significantly shifted short-term expectations for the Bank of Canada. While we knew a base-year effect from the 2025 tax changes would play a role, the dip below the 2% target was sharper than anticipated. Consequently, the overnight index swaps market is now pricing in a near-zero chance of a hike this year and has pulled forward the timing of a potential rate cut into the third quarter.\n\nWith the Canadian dollar strengthening past the 1.3700 level against the US dollar, we should consider strategies that benefit from lower volatility. The surprise in this data point is now known, so implied volatility on one-month USD\/CAD options, which spiked to over 7.5% just before the announcement, may begin to decline. This could make selling strangles an attractive strategy for those who believe the currency pair will now consolidate in a new, lower range.\n\nHowever, we must not ignore that core inflation measures, while easing, remain stubbornly above 2.3%, which will keep the Bank of Canada cautious. This stickiness, combined with the latest Labour Force Survey data showing the unemployment rate ticking up slightly to 6.2%, paints a picture of a slowing but not collapsing economy. This suggests the central bank will wait for more data before committing to a rate cut, making aggressive bearish CAD positions risky.\n\nLooking back, we saw a similar situation in 2015 when the BoC began cutting rates in response to the oil price shock, even while some core inflation metrics were above target. That history suggests the Bank is willing to act pre-emptively based on its growth outlook, not just the current inflation reading. Therefore, traders should be positioned for a dovish shift in the Bank&#8217;s tone this Wednesday, potentially using call options on three-month Canadian Bankers&#8217; Acceptance futures (BAX) to speculate on falling interest rates later this year.\n<p>\r\n\r\n<p><strong>Start trading now &#8211; Click <a href=\"https:\/\/www.vtmarketsglobal.com\/en\/trade-now\/\">here<\/a> to create your real VT Markets account <\/strong> <\/p>\r\n<!-- \/wp:post-content -->","protected":false},"excerpt":{"rendered":"<p>Canada\u2019s CPI slows to 1.8% in February; core eases, base effects cited; loonie strengthens, USD\/CAD slips.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-30809","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/30809","targetHints":{"allow":["GET","POST","PUT","PATCH","DELETE"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=30809"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/30809\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=30809"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=30809"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=30809"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}