The Bank of Canada's July minutes show a Governing Council split over whether the economy's rebound will prove sustainable. Members judged the policy trade-off had diminished as growth resumed and inflation eased, yet they flagged tariffs, housing and oil as risks. USD/CAD showed little change.
Governing Council members went into the Bank of Canada's July 15 rate announcement split over whether the recent rebound in the economy would prove sustainable, the meeting minutes show. With growth resuming and inflation easing, members agreed that the trade-off facing monetary policy had diminished.
That agreement did not extend to the outlook. Policymakers warned that downside risks to growth include businesses failing to adapt to tariffs, weaker consumer spending resilience and a prolonged slowdown in the housing market. Despite improving conditions, they agreed that uncertainty remains elevated, largely due to the unpredictable nature of the Middle East conflict.
Council members saw only limited evidence that higher oil prices were spilling over into the prices of other goods and services. However, they warned that the longer oil prices remain elevated, the greater the risk that inflationary pressures could broaden across the economy.
Members reaffirmed in their communications that they would not allow higher oil prices to lead to persistently higher inflation. Some expressed concern about signs of upward drift in medium-term inflation expectations, although they agreed that longer-term expectations remain well anchored.
The currency market took little from it: USD/CAD showed little change off the comments, with the FOMC rate decision due at the top of the hour.
Source: InvestingLive
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