US Housing Starts Increase to Fastest Pace Since April

This is an account of the deliberations of the Bank of Canada’s Governing Council leading to the monetary policy decision on September 4, 2024. This summary reflects discussions and deliberations by members of Governing Council in stage three of the Bank’s monetary policy decision-making process. This stage takes place after members have received all staff briefings and recommendations. Governing Council’s policy decision-making meetings began on August 29, 2024. The Governor presided over these meetings. Members in attendance were Governor Tiff Macklem, Senior Deputy Governor Carolyn Rogers and Deputy Governors Toni Gravelle, Sharon Kozicki, Nicolas Vincent and Rhys Mendes. International economy Governing Council members began their deliberations by discussing how the global economy had evolved since the July Monetary Policy Report. Their discussion focused primarily on the outlook for growth and inflation in the United States and China. In the United States, growth was higher than expected in July, mainly due to strength in consumption. The successive upside surprises in household spending were puzzling, particularly as the labour market had begun to slow. Members suggested that net wealth effects from strong equity markets, and the fact that existing mortgage holders had locked in low mortgage rates, could be supporting consumption. The low saving rate was viewed as a possible indicator of weakness going forward. Inflation in the United States had eased further. In China, continued weakness in domestic demand had increased the downside risk to post: BOC MINUTES: THE GOVERNING COUNCIL AGREED IT WOULD LIKE TO SEE THE ECONOMY GROW AT A RATE ABOVE POTENTIAL OUTPUT. post: BOC MINUTES: CONCERN ABOUT DOWNSIDE RISKS WAS LINKED TO POTENTIAL FURTHER WEAKENING OF THE ECONOMY AND LABOR MARKET. post: BOC MINUTES: MEMBERS DISCUSSED SECOND SCENARIO WHERE ECONOMY AND LABOR MARKET COULD WEAKEN; IN THIS CASE IT MIGHT BE APPROPRIATE TO SPEED PACE OF CUTS. post: BOC MINUTES: MEMBERS FELT CONSUMERS COULD BE WAITING FOR LOWER RATES TO MAKE LARGE PURCHASES OR ENTER THE HOUSING MARKET.