Bank of Canada ignored Q1 GDP miss, summary shows

Bank of Canada officials were unbothered by an economic contraction early in the year, minutes from their last policy meeting show.

The central bank published a summary of the June 10 deliberations Thursday, revealing a governing council that held its benchmark rate at 2.25% for a fifth-straight decision.

Policy makers acknowledged the economy posted a slight contraction in the first quarter, missing the bank's forecast for 1.5% annualized growth. The miss was a surprise.

Still, the council agreed that not much had changed since April. The summary described recent data as volatile and pointed the reader to early signs of a rebound in the second quarter.

The war in Iran and the coming review of the North American free trade pact remained meaningful sources of uncertainty. Statistics Canada data, however, showed most industries still growing through the first three months of the year, and other indicators pointed to resilience in household spending.

Governor Tiff Macklem’s line – that the economy is “not clearly in a recession” – made it into the summary. The council said a real downturn would be a deep, widespread, and persistent decline in activity.

Markets now expect the bank to hold again at its July 15 meeting, when it will also release a new quarterly Monetary Policy Report with updated growth and inflation forecasts.