Bank of Canada signals rate hike threat amid oil price pressure
The greater concern was a renewed chill on consumer and business confidence that could dampen hiring, investment, and household spending, particularly if trade tensions escalated.
The minutes cautioned that “the breakdown in trade negotiations, new tariffs and threats of further trade measures made growth prospects more uncertain.”
Douglas Porter, chief economist at BMO Capital Markets in Toronto, previously captured the bind, saying, “After energy prices settle down, the focus is going to turn entirely to where the USMCA is headed. And frankly, I’m a bit concerned on that front — I am concerned trade is going to continue to be a drag on the Canadian economy.”
The Bank of Canada’s next interest rate decision is scheduled for October 28, when the central bank will also publish its quarterly Monetary Policy Report.
With rates steady but economists watching for a different move, the Governing Council’s formal statement left little ambiguity about its guiding framework: “While supply shocks can present a tension between addressing economic weakness and rising inflation, members agreed to reiterate that the stance of monetary policy will be guided by the Bank’s inflation forecast and the risks around it.”
