(May 11 – 15:25 ET) – The Bank of Canada has released extracts from the minutes of the board of directors’ meeting on March 23, hinting at future rate increases.
The minutes laid out the case for past rate hikes on the basis of building inflation signals. As those hikes have done little to change the landscape, it is expected that the Bank will follow the U.S. Federal Reserve Board in an expected 50 basis point rate hike at its May 16 meeting.
The minutes point to “stronger-than-anticipated momentum in the world economy”, particularly in the U.S. Although the governor noted that inflation remains low, he suggested that “at some point, productivity gains might not be sufficient to prevent further increases in demand from generating inflationary pressures.”
This buoyant global demand, coupled with rising commodity prices continued to boost the Canadian economy he said. “Moreover, solid gains in employment into the early part of 2000 and the greater-than-anticipated momentum at home and abroad suggested continued healthy economic expansion through this year.”
-James Langton