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Bank of Canada Minutes Reinforce Hold on Interest Rates, Desjardins Says

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The Bank of Canada's latest deliberations signal that monetary policy is likely to remain unchanged in the near term after policymakers held rates steady earlier in July, according to a Desjardins Securities note on Wednesday.

The Governing Council (GC) concluded that policy trade-offs had diminished, with economic growth improving and inflation continuing to decline, according to the central bank's Summary of Deliberations published Wednesday.

"We believe the Bank of Canada is signalling that it would take a major shock to move rates anytime soon," wrote Royce Mendes, head of Market Strategy at Desjardins, in the note.

Policymakers became more confident in a second-quarter rebound but remained cautious on growth durability, added Desjardins. The GC saw limited oil-price pass-through to inflation, with longer-term expectations still anchored, and judged policy to be appropriate.

The policy risk language shifted, with officials removing references to further hikes from high oil prices and potential cuts if US trade tensions intensified, said the bank.

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