Bank of Canada officials split on need for more rate hikes, deliberations show
Further interest rate hikes from the Bank of Canada are very much still on the table as its governing council remains split on whether rates may need to rise further.
The central bank today released its summary of deliberations detailing the discussions governing council members had in the lead-up to its Oct. 25 rate decision.
The summary says some members believed it’s more likely than not that interest rates will need to go higher to get inflation back to target levels.
But other members thought its key rate is now high enough to bring inflation down, so long as the central bank maintains it at that level for long enough.
Featured VideoLast week, Bank of Canada head Tiff Macklem says companies are typically reluctant to raise their prices for fear of losing customers, but high inflation has made them much more willing to do so lately, without worrying that consumers will tap out.
While there were arguments on both sides, members of the governing council all ultimately agreed to keep the rate steady, at least for now.
“There was a strong consensus that, with clearer evidence of higher interest rates moderating spending, slowing growth and relieving price pressures, Governing Council should be patient and hold the policy rate at 5 per cent,” the deliberations showed. “They agreed to revisit the need for a higher policy rate at future decisions with the benefit of more information.”
The central bank remains concerned that inflation is not falling fast enough, despite the economy responding to higher interest rates.
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