The deliberations of the Bank of Canada's Governing Council have resulted in a fixed announcement date for the monetary policy decision on April 10, 2024. The Council, led by Governor Tiff Macklem, engaged in discussions surrounding the global and Canadian economies, as well as inflation outlooks.
In analyzing the international economy, the Council noted projections of stronger growth in the US and gradual improvements in the euro area, while acknowledging challenges faced by China's economy. Governor Macklem and other members highlighted the risk of stronger US GDP growth due to robust consumption supported by various factors.
Shifting focus to the Canadian economy, the Council discussed the impact of population growth on economic activity and inflation outlooks. They noted the expected rebound in growth for 2024, driven by factors such as increased demand for Canadian exports, provincial government spending plans, and anticipated recovery in business investment.
Regarding inflation, the Council reviewed data indicating easing in CPI and core inflation, with a positive outlook for gradual decline in inflation measures. Members emphasized the importance of assessing key indicators such as corporate pricing behavior, inflation expectations, and wage growth in determining the trajectory of underlying inflation.
After thorough deliberation, the Council decided to maintain the policy rate at 5%, citing recent progress in core inflation indicators. While differing opinions existed on the timing of potential rate cuts, there was consensus on the need for further and sustained easing in core inflation. The Council agreed to continue monitoring core inflation closely and to focus on key indicators of underlying inflationary pressures.
As the Bank of Canada continues its path towards normalization, the Governing Council remains committed to its mandate of ensuring price stability and a sustainable economic environment.