The Bank of Canada’s top policymakers have a “diversity of views” about when they expect interest rate cuts to start, but the meeting minutes from the governing council’s latest decision show agreement on the overall pace of easing.
The central bank on Wednesday released the deliberations from its most recent policy rate decision on April 10, where the bank’s benchmark interest rate held steady at 5.0 per cent for a sixth straight meeting.
As Bank of Canada governor Tiff Macklem indicated to reporters after the decision itself, the governing council was “encouraged” by recent progress in taming inflation, according to the release.
Heading into that decision, annual inflation had cooled in Canada to 2.8 per cent, with signs of easing in the central bank’s preferred metrics of core inflation as well. The headline inflation figure ticked up to 2.9 per cent in March, Statistics Canada reported a week after the rate hold.
Policymakers at the Bank of Canada were not considering lowering the policy rate at the April meeting, the deliberations show.
The governing council “agreed that inflation was still too high,” according to the minutes, and felt that more time was needed for elevated interest rates to tame price pressures. Persistent shelter inflation tied to rising rents was highlighted as a particular pain point for price stability.
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There were varying perspectives among policymakers about when economic data would likely give the Bank of Canada enough confidence to deliver a first cut to its policy rate for the cycle. But the deliberations warned that easing in the cost of borrowing won’t come rapidly.
“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,” the deliberations read.
Macklem said after the Bank of Canada’s last rate decision that a first cut in June was in the “realm of possibilities.”
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