BoC Minutes: Governors felt situation could change quickly and rates might have to go up to guard against persistent inflation

• Ahead of BoC's April 29th rate announcement, GC members agreed they had scope to be patient for now.
• Governors felt bank needed to be prepared for adverse outcomes when it came to US trade policy.
• Governors felt that if oil prices stayed high for a prolonged period and fueled inflation, rates would need to go up.
• Governors also acknowledged there could be less excess supply than assessed, and output gap could close faster than forecast.
• Governors felt they could look through initial inflation shock from higher oil prices.
• Governors had a range of views about middle east conflict and USMCA review and thus the most likely path forward for rates.
• In this case, the degree of tightening would also depend on investment in the energy sector and the response of the exchange rate

The BoC minutes reveal a balanced view among governors, showing preparedness for tightening in response to persistent inflation, particularly from sustained high oil prices. This signals that while they see merit in patience now, rapid changes in inflation or external trade pressures could prompt an earlier rate hike, which may influence both CAD and broader market expectations around Canadian monetary policy.