Bank of Canada sees economic growth strengthening but flags higher medium-term inflation expectations and trade risks.
The Bank of Canada’s July deliberations showed a balanced view on economic risks, noting the economy is adjusting to recent shocks and growth is expected to strengthen. However, concerns persist over medium-term inflation expectations drifting higher despite anchored long-term measures.
The minutes cited upside inflation risks and downside growth risks, including potential US tariffs and oil price volatility. While the BoC discussed policy responses to sustained oil price increases, it did not signal rate cuts for escalating trade tensions.
Overall, the outlook remains uncertain, with the BoC emphasizing a cautious approach amid conflicting economic signals.