Whereas the overall rate eased more notably than expected to 2.8% thus reaching the BoC’s control area, the fall in the core rates median and trim remained below expectations.

As positive as it is that the overall rate has returned to levels below 3% the BoC is likely to still focus on the core measures. Tuesday’s data is unlikely to ease its concerns that inflation might be more stubborn than originally assumed.

The next meeting is not due until September. It will have received further inflation and labour market data by then. If the core inflation measures above all are not going to trend downwards in a more dynamic manner it is likely to take action.

With a view to a hawkish seeming BoC, we see further support for CAD on this front.