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BoC minutes show balance on growth, but warn on inflation risks

TD Securities said the Bank of Canada discussed upside inflation and downside growth risks, including the potential effects of oil and US tariffs, without offering parallel guidance on rate cuts tied to trade tensions.

Reported · Written up by our desk · Central Banks

Bank of Canada minutes from its July Summary of Deliberations highlighted a two-sided outlook, with the central bank seeing the economy adjusting to recent shocks and expecting growth to strengthen, while also expressing concern that medium-term inflation expectations could drift higher, according to TD Securities strategists.

The minutes pointed to upside inflation risks and downside growth risks, while also discussing factors such as oil and potential US tariffs as an “ever-present downside risk to growth,” TD Securities noted.

TD Securities said the BoC sought to balance its message by weighing stronger growth against the risk it may not be sustained, and by stressing that longer-term inflation measures remain well anchored.

FXStreet also noted that the minutes did not provide parallel guidance on rate cuts specifically tied to trade tensions.

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