The Bank of Canada has signalled a potential shift in its monetary policy stance, with officials suggesting that rate cuts are likely to happen this year if economic trends align with their projections.
During their March 6 meeting, the central bank’s six-member governing chose to keep the policy rate at 5% and said it is “still too early” to begin adjusting borrowing costs.
This marked the fifth consecutive policy meeting that the BoC officials chose to hold off on cutting rates, but newly released notes from their recent deliberations point to the chance that the streak may end soon.
According to Bloomberg, which obtained a copy of the meeting’s “minutes-like summary” released Wednesday, BoC officials had discussed scenarios under which rate reductions would be deemed appropriate.
However, they had varying opinions regarding the timing and evaluation for such conditions.
“There was some diversity of views among governing council members about when there would likely be enough evidence that these conditions were in place, and how to weight the risks to the outlook,” the meeting’s summary stated.
Council members also expressed concerns over a spring housing rebound and how this could exacerbate inflationary pressures.
“If the housing sector rebounds in the spring, shelter price inflation could be pushed up, delaying the return of CPI inflation to the 2% target,” the summary said. “If inflation proves more persistent than expected, monetary policy would likely need to remain restrictive for longer.”
Statistics Canada released new data this week revealing that inflation eased by 2.8% in February. This has led to some speculation that the BoC will begin cutting rates as early as June.
CMP
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