Bank of Canada Releases Deliberations Behind Interest Rate Decision

The Bank of Canada has released its deliberations behind its decision to keep interest rates steady on July 15, just before the Federal Reserve's announcement. The document outlines the council's discussion and decision-making process, but does not provide a rate that can respond to either risk.

Members of the Governing Council mentioned two risks: upside inflation from the war and downside growth from US trade policy. They also described an economy with no growth between 2025 and 2026, unemployment at 6.5%, and a labour market that is still soft.

The Canadian Dollar's depreciation was attributed to a widening bond-yield differential, with US yields rising on strong data while Canadian yields barely moved. The July projection assumes the Canadian Dollar averages around 71 US cents over the horizon, but spot prices are already there or lower.