While the recent inflation data have strengthened the case for interest rate cuts, we suspect that the Bank of Canada will need at least one more month of similar data before it loosens policy. The policy statement next week is likely to re-emphasise the need to wait a little longer but, if the Bank responds to the recent changes in immigration policy by revising down its inflation forecasts, that may be a sign that it is preparing the ground for a rate cut in June.
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