Some Bank of Canada Officials Worried About Growth, Inflation Expectations

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Or sign-in if you have an account.(Bloomberg) — The Bank of Canada’s governing council agreed the economy was “adjusting” to shocks, though some questioned whether the recovery was sustainable and others raised concerns about rising inflation expectations.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountPolicymakers held the policy rate at 2.25% for a sixth consecutive time when they met earlier this month, arguing that the economy was emerging from a period of stalled growth and that energy-driven inflation pressures were receding. Because of those factors, members of its rate-setting body felt “the trade-off facing monetary policy had diminished,” according to a summary of deliberations released Wednesday. “Members had gained more confidence in the projection that growth would strengthen in the second half of this year,” officials said.At the same time, the summary suggests that the council’s confidence in that recovery wasn’t unanimous.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try again“There was a range of views among Governing Council members about the sustainability of the rebound beyond the near term. Members agreed they would need to monitor the data closely for signs that growth was broadening.”The bank’s forecasts see growth accelerating from 0.7% this year to 1.8% in both 2027 and 2028. The rate decision took place before Trump threatened additional tariffs on imports of Canadian goods. The hostilities between the US and Iran have also escalated since the rate decision. Still, the communications suggest the bank is likely comfortable holding borrowing costs steady.“Based on the forecast, the current policy stance was appropriate for sustaining the economic recovery and bringing inflation back to target,” the bank reiterated.The bank’s summary says some officials were worried about “signs of upward drift in medium-term inflation expectations.”Policymakers also debated the extent to which elevated energy costs related to the Middle East conflict were more broadly hitting prices in the rest of the economy. Officials said excess supply and “slow growth in unit labor costs” were putting downward pressure on service prices, and rent inflation had slowed due to weaker population growth. That helped offset the impact of higher gasoline prices. Previously, the central bank had said it faced a “dilemma” as it balanced inflation risks against ongoing economic slack.—With assistance from Nojoud Al Mallees.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.