BoC Meeting minutes: Central bank feels upside pressure on inflation will continue to decline

Ahead of the Bank of Canada's October 23 rate announcement, governing council felt upside pressures on inflation will continue to decline, so policy did not need to be as restrictive.

Governing council members considered the merits of cutting the policy rate by 25 basis points. There was strong consensus for taking a larger step.

Members wanted to convey that a larger step was appropriate given the economic data seen since July.

Members discussed how slowing rate of population growth would act as a brake on total consumption growth.

Members noted it would take time for lower interest rates to have a big enough impact on per capita spending to overcome the drag on total consumption growth due to lower population growth.

Some members noted that with a soft outlook for demand, domestically oriented companies were reporting modest investment plans.

Governing council felt that if growth did not rise above potential growth, excess supply could persist in pulling inflation lower.

Members discussed the risk that lower interest rates, pent-up demand, and new rules for mortgage qualification could increase demand for housing and boost housing prices more than expected.

Members saw the prospect for stronger energy exports persisting through next year.

Members noted that geopolitical risks and risk of impacts from new shocks were more prominent than normal to the bank's outlook.

Governing council agreed to continue its policy of normalizing the balance sheet by allowing maturing bonds to roll off.