08:19 AM EDT, 06/25/2025 (MT Newswires) -- Tuesday's Canadian inflation figures were broadly in line with expectations, with the only deviation being the non-seasonally adjusted month-on-month headline rate, which was slightly higher than expected, said Commerzbank.

However, this isn't a cause for concern, wrote the bank in a note to clients. Unlike in other Western countries, inflation in Canada has been under control for some time.

After two months of declining prices (seasonally adjusted, month-on-month), one month of higher price increases doesn't make a difference, stated Commerzbank.

As a consequence, the Bank of Canada is unlikely to be particularly concerned by the figures, pointed out Commerzbank. Officials have recently emphasized on several occasions that United States tariffs are likely to lead to price increases.

However, as in the U.S., these effects are probably taking longer than expected to materialize.

The Canadian dollar (CAD or loonie) has recently tended to move sideways, added the bank. USD-CAD falling by around 8 cents since this year's high point was mainly due to the "enormous depreciation" of the US dollar (USD), rather than a pronounced CAD rally.

Continued moderate inflation is likely to increase the likelihood of further interest rate cuts by the BoC in the coming months, so offetting any slow improvements in the real economy. As a consequence, Commerzbank expects lower USD-CAD levels to continue to be primarily driven by USD weakness rather than CAD strength.