The Bank of Canada did not want to give the impression that it was done raising interest rates — or that the cost of borrowing would soon drop — in communicating its most recent policy rate decision, documents released Wednesday show.
The Bank of Canada’s governing council worried that the decision to hold its benchmark interest rate steady on Sept. 6 could be “misinterpreted” as a sign that the central bank’s rate tightening cycle was finished, or that rates could even drop in the near-term, according to a copy of the deliberations from the policymakers’ meeting.
The Bank’s decision-makers opted to stress that the path for future rates was dependent on data and to “emphasize their readiness to raise interest rates further if needed.”
When the Bank of Canada held rates steady in January, it signalled a “conditional pause” in the tightening cycle. That relative calm for borrowers helped briefly bring Canada’s cooling housing market back to life in the spring and got financial markets speculating about when interest rate cuts could be coming.
The deliberations show ongoing concerns about “a lack of progress in core inflation” even as other aspects of the economy are showing signs of easing amid higher interest rates.
The decision to leave the Bank of Canada’s policy rate unchanged earlier this month was widely expected by economists, who viewed slowdowns in the economy and rises in the national unemployment rate as signs inflation would continue to cool despite some persistent price pressures.
But Wednesday’s deliberations show the Bank of Canada remains concerned about the pace of pay raises in the labour market, which have floated around four and five per cent annually in recent months.
“Members still view annual wage
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