Some members were more concerned about downside inflation risks

According to the Bank of Canada’s (BoC) minutes from a recent meeting that was released Wednesday, some governing council members were more concerned about downside risks to inflation.  

Key quotes

  • Some Governing Council members were more concerned about downside risks to inflation.
  • Concern about downside risks was linked to the potential further weakening of the economy and labor market.
  • Other members took the view that risks to the inflation outlook were balanced.
  • Members discussed whether weakness in Canadian consumption and housing could partly be due to caution on the part of households.
  • Members felt consumers could be waiting for lower rates to make large purchases or enter the housing market.
  • Discussed scenario where the economy could weaken and it might be appropriate to speed the pace of cuts.
  • Labor market softening, wage growth still elevated.
  • Housing market subdued.
  • No pre-determined path for rates, decisions to be made meeting-by-meeting.
  • Council puzzled by successive upside surprises in US household spending.
  • Felt low US saving rate was a possible indicator of weakness going forward.
  • In China, continued weakness in domestic demand had increased the downside risk to the growth outlook.
  • The Bank of Canada cut rates by 25 bps at the meeting.
  • Macklem signalled a willingness to cut more-quickly after the decision. 

Market reaction to the BoC Minutes

At the time of writing, USD/CAD was up 0.06% on the day at 1.3612.

 

Source: https://www.fxstreet.com/news/boc-minutes-some-members-were-more-concerned-about-downside-inflation-risks-202409182335