BoC Minutes: Some members of the GC felt the rate would more likely than not need to increase further

• Other council members felt 5% rate would be likely be enough to bring inflation down to 2% target provided it was maintained at that level for long enough.
• Was a strong consensus that with clearer evidence of higher rates having the desired effect, GC should be patient and hold policy rate at 5%.
• Council members agreed to revisit need for rate hike at future decisions with benefit of more data and agreed to state clearly they were prepared to raise the rate further if needed.
• Lack of downward momentum in underlying inflation caused considerable concern and could either mean monetary policy needed more time to work, or that it was not restrictive enough.
• Agreed overall inflationary risks had increased, given higher near-term forecast for inflation, persistent core inflation and risk of higher oil prices.
• Persistence in core inflation, elevated inflation expectations and wage growth, and atypical corporate pricing behavior could indicate high inflation is becoming entrenched.
• In this scenario, council members acknowledged further tightening would likely be required to restore price stability.
• Near-term inflation expectations have been easing and long-term inflation expectations remain well-anchored.
• If global financial conditions tighten further or past hikes restrain demand more than expected, economy could be weaker and inflation lower than projected.
• Council members felt federal and provincial government spending could get in the way of returning inflation to target.
• Israel/Gaza war increases risk oil prices could remain high or rise further; council members noted high level of uncertainty around China outlook.

via BoC