Bank of Canada
- Generally agreed that new data had shifted the balance, with somewhat less risk of lower inflation outcomes
- Would probably have left rates unchanged if not for tariff risks
- A 25 bps cut would provide some help to Canadians to manage the uncertainty around tariffs
- Some officials suggested keep rates unchanged until there was more clarity on tariffs
- Agreed to proceed carefully with further changes to monetary policy
- Said it would take time to balance upward pressure on inflation and downward pressure from demand
This is a hawkish take. The market is pricing in 42 bps of easing in the remainder of this year but if Trump doesn't deliver tariffs on Canada, or they're only around 5%, then we could see the market price out further cuts.
