The latest meeting minutes from the Bank of Canada (BoC) suggest the central bank may be closer to pausing interest rate cuts than previously anticipated. The minutes, detailing the BoC’s most recent rate decision, reveal that policymakers were leaning toward another rate cut in response to ongoing trade and tariff uncertainty stemming from former US President Donald Trump’s administration. The aim was to provide a final boost to the Canadian economy before the full impact of the US’s trade policies took effect.
Key Highlights from the Bank of Canada’s Latest Meeting
The BoC’s Governing Council concluded that a 25 basis point (bps) rate cut would offer some relief to Canadians struggling with the uncertainties surrounding US tariffs. However, had it not been for these tariff concerns, the council likely would have kept rates unchanged at 3%.
Leading up to the Bank’s March 12th rate decision, the council had been increasingly discounting the risks of inflation falling below target. The meeting also reflected a shift in sentiment, with members acknowledging a reduced risk of inflationary pressures easing further.
Importantly, the Governing Council refrained from offering explicit guidance on the future direction of rates. Some members felt the trade uncertainty was significant enough to justify an immediate rate cut, while others suggested it might be prudent to hold rates steady until more clarity emerged regarding the effects of tariffs.
The Governing Council agreed to proceed cautiously with any further monetary policy changes, emphasizing that the effects of tariffs and economic factors might take time to fully materialize. The bank’s policy will continue to balance the upward pressure on inflation from higher costs against the downward pressure from weaker demand.
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