(Reuters) -The Bank of Canada expects to release baseline projections for the economy and inflation with its monetary policy report in October, its summary of deliberations released on Wednesday showed.
The central bank had stopped giving definitive estimates for Canada’s economy from the second quarter and instead opted to lay out a range of projections based on how U.S. tariffs impact the economy.
Governor Tiff Macklem had based the decision to pause baseline estimates on extreme uncertainty over whether higher tariffs from U.S. President Donald Trump would increase inflation or slow economic growth.
“Given the relative stability with respect to U.S. tariffs since the July Report, members expected they would be able to present a baseline projection for growth and inflation in the October Monetary Policy Report,” the minutes of the meeting for the Sept. 17 rates decision showed.
The BoC reduced its key policy rate to a three-year low of 2.5% last month, its first cut in six months, and said it would be ready to cut again if risks to the economy increased in coming months.
Money markets are betting that the odds for another 25 basis point rate cut on Oct. 29 are just over 55%.
The rate-setting committee acknowledged in their meeting that risks to inflation going up were subsiding.
Most counter-tariffs on U.S. goods had been removed, the members believed, and they agreed that there was no longer a significant risk that the cost of tariffs would be passed on to Canadian consumers and create a knock-on effect to other prices.
“Lower input costs from labor, shipping and materials would also likely mean lower inflationary pressures going forward,” the minutes said.
However, they agreed that the risks had not gone away.
The Governing Council said that economic growth could slow further while the adjustment in business investment and jobs plays out.
Members discussed how slower population growth and a softer labor market could dampen growth in household spending in the coming months.
They also expected weak business investment to continue to weigh on economic growth in the second half of the year.
But they agreed that consumption should continue to support growth going forward and that the economy was expected to grow roughly in line with the “current tariff scenario” outlined in the July monetary policy report.
The impending renegotiation of the free-trade agreement between the U.S., Mexico and Canada was fueling some uncertainty, and this could impede recovery in business investment in the near term.
(Reporting by Promit Mukherjee; Editing by Caroline Stauffer)
((promit.mukherjee@thomsonreuters.com))
Keywords: CANADA CENBANK/
(Reporting by Chris Reese)
