According to the Bank of Canada’s (BoC) minutes from a recent meeting that was released Wednesday, some governing council members were more concerned about downside risks to inflation.
Key quotes
- Some Governing Council members were more concerned about downside risks to inflation.
- Concern about downside risks was linked to the potential further weakening of the economy and labor market.
- Other members took the view that risks to the inflation outlook were balanced.
- Members discussed whether weakness in Canadian consumption and housing could partly be due to caution on the part of households.
- Members felt consumers could be waiting for lower rates to make large purchases or enter the housing market.
- Discussed scenario where the economy could weaken and it might be appropriate to speed the pace of cuts.
- Labor market softening, wage growth still elevated.
- Housing market subdued.
- No pre-determined path for rates, decisions to be made meeting-by-meeting.
- Council puzzled by successive upside surprises in US household spending.
- Felt low US saving rate was a possible indicator of weakness going forward.
- In China, continued weakness in domestic demand had increased the downside risk to the growth outlook.
- The Bank of Canada cut rates by 25 bps at the meeting.
- Macklem signalled a willingness to cut more-quickly after the decision.
Market reaction to the BoC Minutes
At the time of writing, USD/CAD was up 0.06% on the day at 1.3612.
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