Bank of Canada Minutes Expose Rift Over July Rate Hold and Trade-Linked Inflation

Bank of Canada minutes released Wednesday show a split among Governing Council members ahead of the 30 July decision that kept the benchmark rate at 2.75%. Some officials judged previous easing sufficient to steer the economy through heightened trade uncertainty, while others argued that further cuts could be required to counter mounting slack. Participants cited “rewiring” of global trade flows and lingering tariffs as a structural shock that may keep inflationary pressure elevated for an extended period. Measures of underlying inflation were seen hovering between 2.5% and 3%, above the 2% target, even as goods exports weakened sharply after a front-loaded surge earlier in the year. Council members agreed to watch incoming data closely and left the door open to additional stimulus if labour-market softness deepens and price pressures subside. For now, they judged that holding rates steady balanced the risk of higher inflation against the need to support growth amid persistent trade uncertainty.