BoC Summary of Deliberations acknowledges widening divergence with US on policy

The Bank of Canada’s (BoC) latest Summary of Deliberations revealed little of note on Wednesday, although several members of the BoC’s Governing Council are growing cautious about downside risks and the possibility of a widening divergence between Canada and the US on economic policy.

Key highlights

• Members agreed to emphasize in communications that they would take rate decisions one meeting at a time.
• Some members were more focused on the downside risks to inflation stemming from the weak economy and restrictive monetary policy.
• Members spent considerable time discussing risks around inflation path, such as large number of households renewing mortgages at higher rates in 2025.
• Ahead of the Bank of Canada’s June 5th rate announcement, the governing council considered the merits of waiting until July 24th to cut rates.
• Members discussed the potential for divergence with US, agreed not close to reaching limits of such divergence.
• Others put more weight on upside risks associated with persistence in wage growth and potential for housing market rebound.
• Other risks include rate cuts leading to an overheated housing market, strong wage growth and weak productivity pushing up service price inflation.