- The overnight rate was at 5.00%
Key line:
While inflation is still too high and risks remain, CPI and core inflation have eased further in recent months. The Council will be looking for evidence that this downward momentum is sustained.
More headlines:
- Governing Council is particularly watching the evolution of core inflation, and continues to focus on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour
- There are some recent signs that wage pressures are moderating.
- The line about the BOC being concerned about inflation risks removed
- The US economy has again proven stronger than anticipated, buoyed by resilient consumption and robust business and government spending.
- A broad range of indicators suggest that labour market conditions continue to ease
- CPI inflation slowed to 2.8% in February, with easing in price pressures becoming more broad-based across goods and services.
Macklem opening statement:
- We’re looking for evidence that the recent further easing in underlying inflation will be sustained
- Growth in the economy looks to be picking up. We expect GDP growth to be solid this year and to strengthen further in 2025.
- We have revised up our outlook for global growth. US economic growth again exceeded expectations, and while growth is expected to slow later this year, economic activity is stronger than previously forecast
- There are also some signs that wage pressures are beginning to ease.
- We don’t want to leave monetary policy this restrictive longer than we need to
- Overall, the data since January have increased our confidence that inflation will continue to come down gradually even as economic activity strengthens
Key line from Macklem:
What do we need to see to be convinced it’s time to cut? The short answer is we are seeing what we need to see, but we need to see it for longer to be confident that progress toward price stability will be sustained. The further decline we’ve seen in core inflation is very recent. We need to be assured this is not just a temporary dip.
The MPR boosted the neutral rate by 25 bps.
USD/CAD was trading at 1.3667 ahead of the decision — the highest levels since November — after hot US inflation data. The pair has hedged further higher to 1.3672 afterwards.
The forecasts see inflation for this year lowered to 2.2% from 2.4%.
This article was written by Adam Button at www.forexlive.com. Source