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.