April 24, 2024, 01:56 PM

Correction: Some Diversity of Views Among Bank of Canada Governing Council Members Around Timing of Rate Cuts

(Correcting initial headlines and report filed to reflect minutes of deliberations related to April 10 policy decision)

Bank of Canada on Wednesday published an account of the deliberations of the Bank of Canada's Governing Council leading to the monetary policy decision on April 10.

Perhaps of most interest to market watchers, the account said: "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."

According to the Minutes, Governing Council members agreed that they had seen further recent progress in core inflation and in key indicators of underlying inflation. While there were different views on how much more assurance was needed to be confident that inflation was on a sustainable path back to the 2% target, there was consensus to maintain the policy rate at 5%.

In its communications on the previous two interest rate decisions, Governing Council had stressed it was looking for "further and sustained easing in core inflation." Members agreed that the decline in core inflation in January and February was "further" easing, and they wanted to see this easing "sustained."

Governing Council agreed to continue to closely watch the evolution of core inflation and remain focused on four key indicators of underlying inflationary pressures, namely: the balance of supply and demand in the economy; and corporate pricing behaviour; and inflation expectations; and wage growth relative to productivity.

Finally, Governing Council agreed to continue its policy of normalizing the balance sheet by allowing maturing bonds to roll off.

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