Bank of Canada Governors Diverge on Economic Recovery Prospects

The Bank of Canada's governing council had differing opinions on whether economic recovery can continue beyond the near term, according to minutes from their July 15 meeting. The central bank kept its benchmark overnight rate at 2.25% and forecasted a 2.5% annualized GDP growth in the second quarter after no growth in the first quarter.

The council members were confident about the rebound in GDP growth but had varying views on the sustainability of this trend beyond the near term. They expressed concerns over several risks to growth, including businesses struggling to adjust to US tariffs and a weakened consumer market.

The bank noted that there was limited evidence that higher oil prices are affecting other goods and services, but agreed that the longer these elevated prices remain, the bigger the risk of their inflationary effects broadening. The central bank targets 2% inflation and will look through direct effects of elevated oil prices.