Bank of Canada minutes: Some members were more concerned about downside inflation risks

  • Some Governing Council members were more concerned about downside risks to inflation
  • Concern about downside risks was linked to potential further weakening of economy and labor market
  • Other members took the view that risks to 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 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
  • BOC deputy Nicolas Vincent speaks tomorrow

The comments on the US economy are more interesting than the ones on the Canadian outlook. I wonder if Macklem got the idea about the low savings rate from his trip to Jackson Hole.

This article was written by Adam Button at www.forexlive.com. Source