Bank of Canada considered waiting until July to cut rates

Bank of Canada officials discussed whether to wait until July to cut interest rates, in order to confirm inflation is still on track to reach the central bank’s 2 per cent target.

The bank’s six-member governing council considered waiting for more consumer price data in order to “gain further assurance” that it was time to start loosening monetary policy. Ultimately, they decided to cut the policy rate to 4.75 per cent at their June 5 meeting. A summary of those deliberations was released Wednesday.

Four consecutive months of slowing underlying price pressures was “sufficient progress to warrant a first cut in the policy rate,” according to the minutes-like summary. Policymakers also agreed it was “reasonable” to expect more rate cuts if inflation continued to ease, wording that made it into Bank of Canada Governor Tiff Macklem’s opening remarks to reporters at the June meeting.

Still, policymakers were concerned progress on inflation could stall as it did in the U.S., and agreed that monetary policy easing would “likely be gradual” and depend on incoming data. Officials agreed to emphasize in their communications that they would “take future monetary policy decisions one meeting at a time.”