Bank of Canada Governors Split Over Sustainability of Economic Rebound

The Bank of Canada's governing council was divided over the sustainability of the country's economic rebound in its July interest rate decision, minutes of the meeting revealed. The bank left its benchmark overnight rate unchanged at 2.25% and forecasted GDP growth of 2.5% on an annualized basis in the second quarter.

The minutes showed that while members were confident about the rebound in the near term, they held a range of views about whether it would continue beyond that period. They agreed to monitor data closely for signs that growth was broadening as projected.

Some governors expressed concerns about potential reasons for disappointing growth, including the failure of businesses to adapt to US tariffs, a stalled housing market in Toronto and Vancouver, fading consumer resilience, and flat exports and business investment.

The bank acknowledged that higher oil prices had contributed to inflation, but said it would look through their direct effects. However, members noted that if oil prices remain elevated, there is a risk of broader inflationary effects.