BoC cuts overnight rate by 25 bps to 4.75%, as anticipated. The central bank stated that recent data has bolstered confidence that inflation will continue to move towards 2% target, despite ongoing risks to the inflation outlook.
BoC emphasized its close monitoring of core inflation trends, the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behavior.
Regarding the economy, BoC noted that Q1 GDP growth was slower than forecasted in the Monetary Policy Report. However, recent data suggest that the economy is “still operating in excess supply.”
BoC acknowledged that measures of core inflation have slowed, with three-month measures indicating continued downward momentum. Indicators of the breadth of price increases across CPI components have moved down further, nearing their historical average. Despite this, shelter price inflation remains high.
