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EA Disinflation Confirmed For ECB Doves

• An unrevised final HICP print confirmed the disinflationary space driving the ECB to cut again in April, despite growing desire to slow easing before it becomes stimulative.
• The median inflation impulse remains at, or slightly below, the target. However, other statistical measures are stickier and labour costs are fundamentally growing too fast.
• EURUSD appreciation compounds disinflationary energy price pressures to trigger another likely slowing in April that might dovishly surprise the consensus again.

By Philip Rush

Canada: Policy Rate Held At 2.75% (Consensus 2.75%) in Apr-25

• The Bank of Canada held its policy rate at 2.75%, meeting expectations but disappointing those market participants who had positioned for another rate cut amid rising trade tensions and economic uncertainty.
• The decision reflects a careful balance between weakening domestic demand and inflation risks from tariff-related cost increases, with short-term inflation expectations having risen despite moderating core inflation.
• Future policy adjustments will be guided by the evolving trade landscape, the extent of demand erosion and cost pass-through, and the anchoring of inflation expectations, with the Bank highlighting its limited role in mitigating trade-driven shocks.