The inflation in Canada is preparing to continue in March before the BOC policy decision

• The Canadian consumer price is expected to be fixed at 2.6 % on an annual basis in March.
• Canada Bank will announce the monetary policy decision on Wednesday.
• The Canadian dollar maintains its strength against its American rival, its lowest level in the future.

Statistics Canada will issue a consumer price index report in March (CPI) on Tuesday. The annual inflation is expected to be 2.6 %, which matches the February reading. Players in the market expect a monthly progress of 0.7 %, and reduce the previous 1.1 %. Meanwhile, Canada (BOC) will issue its basic CPI estimates, which measure the basic inflation by reducing the prices of food and volatile energy. According to the latest version, the Core Boc CPI increased by 0.7 % and 2.7 % on an annual basis in February.

The numbers are relevant before the announcement of the monetary policy of Canada on Wednesday. It is widely expected that the central bank will maintain the standard interest rate of 2.75 %. Officials reduced it when they met March 12, the seventh discount in a row, leaving the main rate of its lowest level since 2022.

The expected height of inflation is more worrisome than politics may allow. The US President (United States), Donald Trump, has taken a tariff for all trading partners to a large extent. Going back and forth in Trump’s declaration still leads to Canada by 25 % of exports to the United States.

Before the announcement, the USD/CAD pair is trading near the lowest multi -month -old -monthly level published in April 1.3827.

What can we expect the inflation rate in Canada?

BOC officials are well aware of the risks related to the trade war and its potential effects on the local economy. The slowing growth and high inflationary pressures are the heart of fears, not only in Canada.

Political makers also expected volatile inflation levels amid customs tariffs, but they expected that they would remain near 2 % on the horizon of dropping. Will they maintain such an opinion? This is something that has not yet been seen after the release of the consumer price index report.

The officials also expressed that the White House decision to impose a huge tariff “has emerged as a major source of uncertainty.” It is not the only one. Investors are not sure what BOC will do this week. While there is a large consensus indicating a decision on pregnancy, there is a large part of analysts who expect another 25 -bit interest rate.

The rate reduction in the table can be if the consumer price index numbers are less than expectations. On the other hand, the high prices in prices seem unlikely at this stage, but the upper numbers of expected must lead to speculation that price discounts have ended in the near future. The correct shift to the most stable Canadian dollar (CAD), although investors may keep their fire during the CPI version before BOC confirm one day.

In addition, it should be noted that increasing fears of stagnation may force BOC to reduce interest rates, even if inflationary pressures increase more than expected in March.

As it was said, uncertainty is high among all participants in the market. With this in mind, the reaction to the release of the data can be short -term and soon the main headlines related to the tariff.

When is the Cana CPI data due and how can it affect the US dollar/CAD?

The inflation report will be published in March, March, at 12:30 GMT, as market participants expect price pressure to remain unchanged on a large scale from February. As usual, the difference between market expectations and actual numbers will be responsible for the CAD reaction.

In general, the upcoming figures may indicate that BOC may need to adopt a more honesty position, thus pushing CAD higher for other competitors. The opposite scenario is also valid, as more sophisticated readings indicate that BOC can continue to reduce trimms. However, at the same time, a sharp acceleration in price pressures may motivate concerns about Canadian economic health, and, accordingly, weighs CAD.

Valeria Bidenarik, the chief analyst of FXSTREET, notes: “Before the announcement, the Canadian dollar reinforces the gains against the destroyed US dollar.

Bednarik adds: “USD/CAD stops temporarily in front of the first -class events, but the technical danger is still deviant to the negative side. The lowest monthly level at 1.3827 is immediate support before resistance, CPI can be found to 1.350. It is possible that 1.4,000 selling sale.”