FILE PHOTO: The Bank of Canada building is pictured in Ottawa June 1, 2010. REUTERS/Chris Wattie/File Photo
By Promit Mukherjee and David Ljunggren
OTTAWA, April 24 (Reuters) – The Bank of Canada’s (BoC) governing council agreed this month that interest rates would most likely only come down gradually, given the risks to the inflation outlook, minutes of the meeting published on Wednesday showed.
The central bank kept its key interest rate unchanged at a near 23-year high of 5% on April 10 and minutes of the discussions before the announcement showed the six-member council was split on the timing of a possible cut.
“While there was a diversity of views about when conditions would likely warrant cutting the policy rate, they agreed that monetary policy easing would probably be gradual, given risks to the outlook and the slow path for returning inflation to target,” said the minutes.
Governor Tiff Macklem said last Friday that while inflation was showing signs of cooling, the bank would want to see more signs of sustained progress before it could start cutting rates.
The bank increased interest rates by 475 basis points in a space of 16 months before leaving them on hold since last July.
While this helped cool inflation from a high of 8.1% in June 2022 to 2.9% in March, the bank estimates it will take until the end of 2025 before inflation attains its 2% target, due in part to stubbornly high shelter costs.
The governing council noted steady progress on reducing both the overall rate of inflation as well as core measures, which strip out more the prices of more volatile items.
“Some members emphasized that, with the economy performing well, the risk had diminished that restrictive monetary policy would slow the economy more than necessary to return inflation to target,” the minutes said.
These members felt more reassurance was needed to reduce the risk that the downward progress on core inflation would stall.
“Others placed more emphasis on the progress made in bringing inflation down … they felt there was a risk of keeping monetary policy more restrictive than needed,” according to the deliberations.
Macklem said on April 10 that a June rate cut might be possible. Money markets view the chance of a June rate cut as a coin toss, while a 25 basis-point cut in July is fully priced in..
The members also discussed the path of population growth and the recent move by the federal government to reduce the share of non-permanent residents, factors it said “complicated the outlook for economic activity and inflation.”
(Reuters Ottawa bureau)
Keywords: CANADA CENBANK/
News Related-
The best Walmart Cyber Monday deals 2023
-
Jordan Poole took time to showboat and got his shot blocked into the stratosphere
-
The Top Canadian REITs to Buy in November 2023
-
OpenAI’s board might have been dysfunctional–but they made the right choice. Their defeat shows that in the battle between AI profits and ethics, it’s no contest
-
Russia-Ukraine Drone Warfare Rages With Dozens Headed for Moscow, Amid Deadly Winter Storm
-
Trump tells appeals court that threats to judge and clerk in NY civil fraud trial do not justify gag order
-
Can Anyone Take Paxlovid for Covid? Doctors Explain.
-
Google this week will begin deleting inactive accounts. Here's how to save yours.
-
How John Tortorella's Culture Extends from the Philadelphia Flyers to the AHL Phantoms
-
Tri-Cities' hatcheries report best Coho return in years
-
Wild release Dean Evason of head coaching duties
-
Air New Zealand’s Cyber Monday Sale Has the 'Lowest Fares of 2023' to Auckland, Sydney, and More
-
NDP tells Liberals to sweeten the deal if pharmacare legislation is delayed
-
'1,000 contacts with a club': Tiger Woods breaks down his typical tournament prep to college kids in fascinating video