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Bank of Canada More Concerned About Inflation Than Speeches Imply

The BoC is concerned the slowdown hasn’t brought inflation lower already.

Canada’s central bank projected an “everything is under control” attitude at last month’s announcement. The Bank of Canada (BoC) governor even shifted the conversation from threatening rate hikes, to discussing when the next cuts are coming. All of that confidence was absent from the Governing Council’s summary of deliberations. The notes show the council is growing increasingly concerned that inflation isn’t cooling nearly as fast as the economy. They warn that more than half of the inflation index is still growing significantly faster than the target. An issue that might disappoint the public, potentially extending the length that higher rates stick around.

Canadian Economy Weakening, To Help Slow Inflation

The BoC shares concerns with most analysts when it comes to slowing economic growth. Their deliberations specifically mention negative per capita GDP growth persisting over four quarters. They also note job vacancies resemble pre-pandemic days, declining residential construction activity, and slowing consumer spending. In the next few months, they anticipate the slowdown in spending will get worse as the economy continues to drag. …[Continue Reading]