(Bloomberg) -- Some members of the Bank of Canada’s governing council argued at their last meeting that borrowing costs would need to rise further to bring...
-- Some members of the Bank of Canada’s governing council argued at their last meeting that borrowing costs would need to rise further to bring inflation to heel, but policymakers agreed they “should be patient” and hold rates steady for now, before revisiting tightening in the future.Xi to Meet US Business Leaders for Dinner in San FranciscoOfficials decided to keep the benchmark overnight interest rate at 5% on Oct.
The text of the discussions that led to the rate decision suggests officials increasingly think they’ve tightened borrowing costs enough to return inflation to the 2% target, but are keeping the door open to additional hikes until they get a better sense that inflation is decelerating. Policymakers said they remain concerned about underlying price pressures — which strip out more volatile price movements – since they’ve been running between 3.5% and 4% over the last year, suggesting “little downward momentum.”“Members noted that they needed to see downward momentum in core inflation to be confident that monetary policy was sufficiently restrictive to restore price stability.”
Officials also reiterated that they expect federal and provincial fiscal spending to rise 2.5% in 2024, faster than growth in supply, which “could get in the way of returning inflation to target.” As Canada's economy enters a period of sluggish growth, the big banks are looking to fortify their balance sheets against rising bad debts, but instead of tapping shareholders for funds, the lenders are expected to sell non-core assets and cap dividends, fund managers and analysts said. Banks have traditionally issued shares or bonds to raise capital, but with stock prices of the top five banks down between 5% and 11.
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