Bank of Canada officials are at odds over when to cut interest rates, reflecting differing views on the state of the economy. At their recent meeting, members of the Bank's governing council debated the timing of rate cuts.
According to a summary of their discussions, some council members advocated for patience, citing the strong performance of the Canadian economy and ongoing inflation risks. They suggested waiting before lowering rates.
Conversely, others pointed out a slowdown in inflation and voiced concerns about maintaining high interest rates for too long. They emphasized the need to act promptly to avoid stifling economic growth.
Despite these divergent opinions, the council agreed to maintain the key interest rate at five per cent for the time being. However, they acknowledged that any future rate cuts would likely be gradual, reflecting the uncertainties in the economic outlook and the gradual pace of returning inflation to target levels.
Economists anticipate that the Bank of Canada may start reducing its policy rate as early as June or July. This move comes as the Bank observes a notable deceleration in inflation, including core measures that exclude volatile price fluctuations.
In a news conference following the meeting, Governor Tiff Macklem hinted at the possibility of an interest rate cut in June, highlighting the dynamic nature of the Bank's decision-making process in response to evolving economic conditions.
