BOC Summary of Governing Council Deliberations

Overview

The Bank of Canada's (BOC) Governing Council met on September 7, 2023, to deliberate on economic conditions and the monetary policy stance. The Council decided to increase the target for the overnight rate to 4.0%, from 3.5% previously.

Economic Conditions

The Council noted that the Canadian economy continues to grow, supported by strong domestic demand and a recovery in exports. The labor market remains tight, with the unemployment rate at a record low.

Inflation remains above the BOC's target of 2%, driven by rising food, energy, and housing costs. The Council expects inflation to moderate over the coming months but remain elevated in the near term.

Monetary Policy Decision

In light of the economic conditions and inflation outlook, the Council decided to raise the target for the overnight rate by 50 basis points to 4.0%.

The Council judges that further increases in the policy rate will be required to bring inflation back to target. The pace of future increases will be guided by the Council's assessment of the economic outlook and inflation developments.

Risks to the Outlook

The Council noted that there are risks to the economic outlook, including geopolitical tensions, ongoing supply chain disruptions, and the global economic slowdown.

The Council will continue to monitor these risks and adjust its monetary policy stance as needed to achieve its inflation target.

Conclusion

The BOC's Governing Council has raised the target for the overnight rate to 4.0% in an effort to bring inflation back to target. The Council will continue to monitor the economic outlook and inflation developments and adjust its monetary policy stance as needed.