The Bank of Canada’s Governing Council remains split over when they think conditions will be right to begin lowering the country’s key interest rates.
Once they begin, however, the council is in agreement that the cuts will be delivered gradually.
That’s according to the latest summary of deliberations from the Bank of Canada’s April 10 monetary policy meeting, where its six-member Governing Council unanimously voted to leave the benchmark rate unchanged at 5.00%.
The Governing Council members agreed that there had been additional progress in core inflation and in key indicators of underlying inflation.
“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,'” the summary reads. “Members agreed that the decline in core inflation in January and February was ‘further’ easing, and they wanted to see this easing ‘sustained.'”
The summary noted that some members were focused on upside inflation risks, in particular stronger-than-expected inflation readings in the U.S. and better-than-expected economic growth in Canada.
Others highlighted the significant progress made in bringing inflation down from its peak of 8.1% in June 2022, along with excess supply expected to keep downward pressure on inflation going forward.
Current expectations among markets and economists are that the Bank is likely to deliver its first quarter-point rate cut at either its June 5 or July 24 monetary policy meetings. That would bring the Bank’s benchmark rate down to 4.75%, a level last seen in June 2023.
The Bank’s Governing Council members were in agreement that easing to the overnight target rate would “probably be gradual, given risks to the outlook and the slow path for returning inflation to target,” the summary noted.
BMO economist Benjamin Reitzes noted that a fourth-straight “subdued” inflation report in May would mean the Bank of Canada would “strongly consider” cutting rates at its June meeting.
“Beyond that, it’s clear that rate cuts will be gradual, and that the BoC is in no rush to get back to neutral,” he added.
Bank of Canada Benjamin Reitzes BoC deliberations BoC rate expectations deliberation summary inflation inflation expectations summary of deliberations
Last modified: April 24, 2024
I called for Macklin’s removal in October 2023. Unfortunately for all Canadians, I am not consulted in whose ass should be fired at the BOC.
Macklin has been ensuring his self fulfilling prophecy of inflation.
The inflation rate is currently under control but the bank’s five per cent interest rate is continuing to contribute to the affordability crisis.
Interest rates are a big piece of why life and specifically housing is so expensive. So in some ways, right now what you’re seeing is the Bank of Canada’s actions are also causing inflation. Not just home prices, but rental prices are no longer affordable and out of control. The rental problem is also a direct result of the BOC’s and Macklin’s poor judgement.
Slow to recognize the danger of inflation and then a huge knee jerk (over)reaction as opposed to being proactive, now Macklin is ensuring maximum damage on Canadians.
In keeping the BOC’s rate so high, inflation is a direct result, allowing Macklin to justify his actions – or abysmal lack of action.
BOC has been short sighted and reactionary with inflation. From initially dismissing it, to working towards crippling the economy.
Yes. Recession and high unemployment will lower some prices in still competitive markets perhaps… But taking Canada into a recession as a solution is ridiculous.
Are we really taking off our nose to spite our face?!
It takes 9 to 18 months for an interest rate to work through the economy have make a difference.
Let’s be generous… BOC’s 1st and 2nd interest rates are now affecting inflation and moving it back to reasonable levels.
But you do not raise your rates historically fast and with abandon without evaluating results.
When BOC’s foolish increases really start depressing the economy then it will be to late and damage will have been done.
BOC will immediately gloat that they tamed inflation(by putting people out of work and out of their Homes… Arn’t rental prices skyrocketing because BOC just arranged to ensure no one can purchase a home ?) The fact that they have taken Canada into recession will conveniently be forgotten..: and THAT is going to take a lot longer to repair the damage done.
BOC was slow to react at the end of 2021.
Realizing how badly they screwed up, they immediately jumped into action…. And totally over reacted…. Then didn’t bother to evaluate the results of what they had done.
By the time that the BOC’s rate hikes get through the system and show the affects… it will be to late… and BOC will again have to be reactive and not proactive… they will be forced yo bring rates down or continue to destroy the economy and further delay recovery.
Using the 40 year old tools from a different age and entirely different circumstances is not how to fight inflation today. Taking Canada into economic peril will do more damage then good. The root problems of demand and supply go to far beyond interest rates.
But BOC has been successful in taking families from financial discomfort to the edge of ruin through there actions.
I’ll pay $2.00 a litre for gas if I can get my $1400.00/month mortgage or rental overpayment back.
BOC needs new leadership immediately.