Bank of Canada minutes: Some members were more concerned about downside inflation risks

• Some Governing Council members were more concerned about downside risks to inflation
• Concern about downside risks was linked to potential further weakening of economy and labor market
• Other members took the view that risks to inflation outlook were balanced
• Members discussed whether weakness in Canadian consumption and housing could partly be due to caution on the part of households
• Members felt consumers could be waiting for lower rates to make large purchases or enter the housing market
• Discussed scenario where economy could weaken and it might be appropriate to speed the pace of cuts
• Labor market softening, wage growth still elevated
• Housing market subdued
• No pre-determined path for rates, decisions to be made meeting-by-meeting
• Council puzzled by successive upside surprises in US household spending
• Felt low US saving rate was a possible indicator of weakness going forward
• In China, continued weakness in domestic demand had increased the downside risk to the growth outlook
• The Bank of Canada cut rates by 25 bps at the meeting
• Macklem signalled a willingness to cut more-quickly after the decision
• BOC deputy Nicolas Vincent speaks tomorrow

The comments on the US economy are more interesting than the ones on the Canadian outlook. I wonder if Macklem got the idea about the low savings rate from his trip to Jackson Hole.

This article was written by Adam Button at www.forexlive.com.