Policymakers kept the benchmark overnight rate at 2.25% and projected a Q2 rebound, while warning that tariff risks, oil-driven inflation and broader uncertainty could cloud the outlook.
Bank of Canada minutes showed policymakers were divided ahead of their July 15 decision over whether a second-quarter rebound would prove durable, even as they left the benchmark overnight rate unchanged at 2.25% and projected 2.5% annualized growth in Q2. Officials said they were confident about the pickup in GDP growth but wanted incoming data to confirm that growth was broadening. They highlighted risks including businesses struggling to adapt to Trump administration tariff hikes, stalled housing in Toronto and Vancouver, fading consumer resilience, and flat exports and business investment. The bank said it would look through the direct effects of higher oil prices for now, while warning that a prolonged period of elevated crude could broaden inflationary pressure. Some policymakers flagged signs of firmer medium-term inflation expectations, though longer-term expectations were seen as firmly anchored. The minutes said the trade-offs facing monetary policy had diminished as growth recovered and inflation eased, but uncertainty remained high.