The governing council did not decide the timing for the Bank of Canada interest rate cut during their recent meeting. The central bank shared a summary of their talks before deciding not to introduce the BOC interest rate cut on April 10.
Bank of Canada Interest Rate Cut Decision
According to the summary, some members believed the central bank should hold off on introducing a BOC interest rate cut. This is due to Canada’s strong economy and ongoing concerns about inflation.
On the other hand, some members have talked about the slowdown in inflation and worried about how not introducing the BOC interest rate cut could affect the country. They believed that with the economy doing well, the chances were lower that tight monetary policy would excessively slow down the economy. However, others focused more on the advancements in reducing inflation by not introducing the Bank of Canada interest rate cut.
Even though there were differing opinions, the council has decided to keep the key BOC interest rate steady at 5% for now. They also agreed that if Canada rate cuts were needed, they would not be happening all at once. Instead, the Bank of Canada interest rate cut would likely be gradual. This is because of uncertainties in the outlook and the slow progress in bringing inflation back to target. Economists are hoping the Bank of Canada interest rate cut might happen around around June or July.
When is the Next Possible Date For Canada Rate Cuts
The Bank of Canada has been happy with the decrease in inflation. This reduction in inflation has happened in the core measures that exclude volatile price changes. In March, Canada’s inflation rate was 2.9%, falling within the central bank’s target range of 1% to 3%. During an April 10 news conference, Governor Tiff Macklem said that a potential Bank of Canada interest rate cut in June was being considered.
The Bank of Canada’s governing council recently agreed that any BOC interest rate cut would likely be gradual, considering the risks to inflation. Minutes from the meeting, released on Wednesday, it was revealed that the central bank opted to maintain its key interest rate at 5%, which is near a 23-year high. The minutes also showed a split among the six-member council in the timing of potential Canada rate cuts.
The minutes showed different opinions on when to introduce the Bank of Canada interest rate cut. There have been signs that any easing would likely be gradual due to economic risks and slow progress in reaching inflation targets.
The minutes said that some members noted the strong economy, reducing the concern that strict monetary policy might overly slow down the economy to meet inflation targets.
The bank raised the BOC interest rate by 4.75% over 16 months but has kept it steady since last July. This move helped lower inflation from 8.1% in June 2022 to 2.9% in March. However, reaching the 2% target may take until the end of 2025 due to persistent high shelter costs. The council observed steady progress in reducing both overall inflation and core measures, which exclude volatile prices.
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