Bank of Canada Governing Council Expressed Inflation Concerns Amid Rising Gas Prices

The Bank of Canada's governing council expressed concerns about elevated inflation risks at its September meeting, as indicated by recently released minutes.

The council maintained the benchmark rate at 2.25% on September 2 and acknowledged that policymakers stood ready to increase borrowing costs multiple times if inflation remained too high, according to Governor Tiff Macklem.

Persistently high gasoline prices were a major concern for the council, with conflict in Iran being cited as a factor raising market expectations for oil prices. Members found little evidence of elevated gasoline prices spilling over into other goods and services but concluded that tensions in the Middle East would keep gasoline and diesel prices high.

The central bank's governing council also noted the breakdown in trade negotiations with the United States, new tariffs, and threats of further trade measures as making growth prospects and sustainability uncertain. Despite this, they acknowledged that the economy had largely evolved in line with expectations since the July monetary policy report, with growth broadening and the labor market improving.