OTTAWA — Some members of the Bank of Canada's governing council are growing concerned that high interest rates may bring down inflation by more than necessary.
The central bank's summary of deliberations released Wednesday offers a glimpse into the council's discussions in the lead-up to the Sept. 4 interest rate cut.
Some members took the view that the risks were balanced, with strength in shelter and services price inflation offsetting the downward pressure from excess supply, the summary says.
"Some had become more concerned with the downside risks to inflation, particularly if the economy and labour market weakened further."
The summary comes one day after Statistics Canada reported that inflation hit two per cent last month, finally reaching the Bank of Canada's target.
Forecasters are bracing for the possibility of larger interest rate cuts in the coming months, given the significant progress made on the inflation front.
The summary of deliberations reiterated that the central bank is ready to slow or speed up the pace of rate cuts, depending on how inflation evolves.
While housing continues to be the largest driver of inflation, the summary noted shelter price growth has begun to slow and risks of it reaccelerating had diminished.
"Nevertheless, members observed that the housing market could still pick up more quickly than expected," the summary says.
CI小蓝视频 is forecasting the Bank of Canada will lower its key interest rate, which currently stands at 4.25 per cent, by two percentage points between now and the middle of next year.
That forecast accounts for two half-point interest rate cuts.
The Bank of Canada's next rate announcement is scheduled for Oct. 23.
This report by The Canadian Press was first published Sept. 18, 2024.
Nojoud Al Mallees, The Canadian Press
