The Bank of Canada's Governing Council convened to deliberate on the monetary policy decision announced on June 4, 2025. The discussions occurred after members received comprehensive staff briefings and recommendations. The meetings began on May 30, 2025, under the leadership of Governor Tiff Macklem. Senior Deputy Governor Carolyn Rogers and Deputy Governors Toni Gravelle, Sharon Kozicki, Nicolas Vincent, Rhys Mendes, and Michelle Alexopoulos were in attendance.
The council commenced its deliberations by examining global economic developments since the April Monetary Policy Report. The United States had been adjusting tariffs with various trading partners. Despite this, members agreed that US trade policy remained unpredictable and uncertainty was high.
In the United States, domestic demand showed robustness with a growth rate of about 2.5% in the first quarter. Inflation had been easing gradually as expected, though tariff impacts were beginning to emerge in data. Meanwhile, the euro area economy was strong due to preemptive exports ahead of US tariffs and anticipated increases in defense spending. China's economic growth slowed as fiscal policy measures' effects waned.
Financial conditions were noted to be similar to those at the year's start, with a 4% appreciation of the Canadian dollar attributed largely to US dollar weakness. Markets experienced severe but short-lived turmoil in April; however, volatility lessened as US tariffs were scaled back from their peaks.
Turning attention to Canada’s economy, first-quarter growth exceeded expectations slightly due to robust exports and inventory accumulation amid tariff concerns. Consumer spending grew by 1.2%, supported by resilient business investment despite trade policy uncertainties.
Labour market softness was noted with slowed employment growth in April and an increased unemployment rate of 6.9%. Weakness concentrated in trade-related sectors like manufacturing had not spread broadly across other sectors.
Members discussed inflation trends where CPI inflation declined to 1.7% in April following consumer carbon tax elimination which reduced overall rates by 0.6 percentage points; excluding taxes it stood at 2.3%. Food prices rose reflecting higher costs possibly linked to trade disruptions.
Governing Council explored potential impacts of ongoing trade conflicts initiated by the United States on Canadian exports and broader economic activities including business investment and household spending amidst evolving inflation expectations influenced by tariffs.
Ultimately deciding against altering monetary policy for now—keeping interest rates steady at 2.75%—the council emphasized monitoring US trade policies closely alongside evaluating opposing pressures on inflation stemming from weaker demand versus heightened costs.
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