The Bank of Canada’s top officials cited a “mixed picture” on the direction for underlying inflation and the Canadian economy in deciding to hold its benchmark interest rate late last month, newly released deliberations show.
The central bank on Wednesday released the minutes from the governing council meeting in January that led to the policy rate holding steady at 5.0 per cent for the fourth consecutive decision.
The documents show the Bank of Canada’s top monetary policymakers discussed the outlook for inflation amid pressures from rising shelter costs, hot wage growth and elevated price expectations from consumers.
While the governing council indicated that recent weakness in the economy should continue to chill inflation going forward, these signs of stubbornness in taming price pressures made it difficult to say with certainty how long interest rates would need to stay at the current restrictive levels.
“Overall, members agreed that these indicators painted a mixed picture of underlying inflation. More time was needed for past interest rate increases to relieve price pressures,” the deliberations read.
Inflation has cooled from highs seen in June 2022, most recently coming in at 3.4 per cent in December 2023. But shelter inflation continues to run hotter than the overall consumer basket and wage growth is holding firm as productivity falters, which the governing council highlighted as a possible inflationary fuel in its discussions.
The Bank of Canada’s closely watched metrics of core inflation also continue to run around 3.5 per cent – above the central bank’s two per cent target.
While not barring future inflation shocks, the Bank of Canada has indicated that upcoming decisions will likely shift toward
Read more on globalnews.ca