BoC minutes reveal clear consensus for further rate cuts

BoC’s Summary of Deliberations from its July meeting indicates a “clear consensus” on the need for more rate cuts if inflation continues to ease. With inflation “closer to target” and “downside risks” becoming “more prominent,” members agreed that it would be appropriate to “lower the policy rate further” if inflation follows the projected path.

During the meeting, members discussed various risks to the inflation outlook. The focus was on “downside risks” more than in previous meetings. Members acknowledged that weak consumer sentiment is likely to persist, posing a risk that consumer spending could be “significantly weaker” than expected in 2025 and 2026. Additionally, further labor market weakness could “delay the rebound” in consumption, exerting “downward pressure on growth and inflation.”

Conversely, some members highlighted the “stickiness of services price inflation,” which could keep inflation elevated. They noted that price pressures in services, which are “more closely affected by wages,” are unlikely to be offset by the disinflation seen in goods and other services in recent months.

Full BoC Summary of Deliberations here.