BoC Minutes (October 28th meeting): Regarding the path forward, BoC recognised that uncertainty did not mean inaction, but they would need to proceed carefully

• Agreed that monetary policy can prevent energy prices from leading to generalised inflation
• Acknowledged that inflation expectations may have become more sensitive to recent price changes
• Noted that rising cost pressures would eventually be reflected in core measures of inflation
• Agreed it would need to carefully assess how economic developments would affect the outlook
• Businesses are facing higher costs from non-energy imports, such as semiconductors and computer components

Governing Council members deliberated two options: maintain the policy rate at 2.25% or raise the policy rate to 2.5%.

• The main argument for holding the policy rate at 2.25% was that the rise in inflation had so far been concentrated in energy prices and in services that rely heavily on energy inputs, such as airfares.
• The main argument for increasing the policy interest rate was that prices of gasoline, diesel and heating oil were considerably higher than in July and were expected to remain higher for longer.

Governing Council also discussed the path forward for the policy interest rate.

• Members acknowledged there was considerable uncertainty, both about developments outside Canada and about their impacts in Canada.
• They recognized that uncertainty did not mean inaction, but they agreed they would need to proceed carefully to assess how economic developments would affect their outlook.
• Governing Council members agreed there could be a need to increase the policy rate further, but given the uncertainty, they would take monetary policy decisions one meeting at a time with the benefit of the best available information.

Minutes of this kind are read less for the decision than for the width of the debate, and here the two-option framing between a hold and a 25bp hike signals a council closer to the tightening margin than the headline caution implies. The distinction that matters in such episodes is between an energy-led price shock the bank looks through and one it treats as a pass-through risk: the language on expectations becoming more sensitive to recent price changes and on cost pressures eventually reaching core measures is the standard formulation banks use when preparing the ground for acting on second-round effects rather than the initial shock. The 'uncertainty did not mean inaction' phrasing paired with meeting-by-meeting guidance is a familiar construction, historically associated with cycles where the direction of travel is settled but the pace is left data-dependent, which raises the sensitivity of subsequent inflation prints relative to the rate decision itself. The acknowledgment that further increases could be needed, stated explicitly, puts a hawkish floor under the front end of the Canadian curve and tends to support CAD via the rate differential channel in comparable episodes. The tell going forward is whether the energy-concentration argument for patience survives contact with core measures, since the minutes themselves flag that this is where the council expects the pressure to migrate. The deliberation framing also means any surprise in pass-through data reads asymmetrically against the hawks' stated case rather than the doves'.