By Promit Mukherjee and David Ljunggren
OTTAWA, April 30 (Reuters) – The Bank of Canada discussed whether to cut rates again earlier this month but decided not to given the uncertainty caused by U.S. tariffs, according to minutes of discussions released on Wednesday.
After seven consecutive cuts since last June the Bank’s governing council decided to hold rates on April 16 while saying it would be ready to move decisively if needed to keep inflation under control. It has shrunk rates by 225 basis points to 2.75%.
“While there were differences in views, everyone agreed there was a great deal of uncertainty and the situation could change quickly,” its summary of deliberations said.
“They also agreed they should be less forward looking than usual,” it added.
U.S. President Donald Trump has imposed tariffs on a wide range of Canadian goods, prompting Ottawa to retaliate with its own set of countermeasures. The trade war has hit exports, demand, investments and jobs.
Member favoring another cut cited the weakening economy and noted muted near-term inflation risks.
“As long as medium- to long-term inflation expectations remained anchored, they had the flexibility to reduce the policy interest rate further to support growth,” the minutes cited the members as saying.
Those who wanted to hold rates said they needed more time to gather information on the impact of tariffs.
“Continuing to lower the policy interest rate at this meeting could end up being premature in a context where past cuts were still working their way through the economy and where upward pressure on inflation from tariffs could come through quickly,” the minutes said.
Members identified two layers of uncertainty – the path of U.S. trade policy and impact of tariffs. This made it difficult for governing council to assess the probabilities of how the economy and prices would evolve.
But they agreed their cuts were still working their way through the economy, which was contributing to stronger economic activity while keeping inflation close to 2%.
“Members agreed that in the face of tariffs, monetary policy should support the economy while maintaining its primary focus on price stability,” the deliberations said.
(Reuters Ottawa editorial)
Keywords: CANADA CENBANK/
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