BoC Minutes: Some members were more concerned about downside risks to inflation

According to minutes from a recent Bank of Canada (BoC) meeting released on Wednesday, some members of the governing council were more concerned about downside risks to inflation.

Key quotes

• Some Governing Council members were more concerned about downside risks to inflation.
• Concerns about downside risks were linked to a possible further weakening of the economy and the labor market.
• Other members viewed risks to the inflation outlook as balanced.
• Members discussed whether weakness in Canadian consumption and housing could be due in part to household caution.
• Members felt that consumers may be waiting for lower rates to make large purchases or enter the housing market.
• A scenario was discussed in which the economy could weaken and it might be appropriate to accelerate the pace of cuts.
• The labor market is weakening, wage growth remains high.
• The housing market is depressed.
• There is no set path for rates, decisions will be made on a meeting-by-meeting basis.
• The board was baffled by successive upward surprises in U.S. household spending.
• They viewed the low US savings rate as a possible indicator of future weakness.
• In China, continued weakness in domestic demand had increased the downside risk to the growth outlook.
• The Bank of Canada cut rates by 25 basis points at the meeting.
• Macklem signaled his willingness to cut more quickly after the decision.

Market reaction to BoC minutes

At the time of writing, USD/CAD was up 0.06% on the day at 1.3612.