BOC Minutes Reveal 5% Rate Likely Sufficient for Inflation Target; ECB, Fed, and RBA Officials Discuss Restrictive Policy

The Bank of Canada (BOC) minutes reveal that council members felt a 5% rate would likely be enough to bring inflation down to the 2% target if maintained for long enough. Near-term inflation expectations have been easing, while long-term expectations remain well-anchored. Concerns were raised about the lack of downward momentum in underlying inflation, leading to increased overall inflationary risks. European Central Bank (ECB) officials, including De Guindos and Vujcic, expressed that it is premature to consider rate cuts. Bostic from the Federal Reserve (Fed) believes that policy is likely sufficiently restrictive, while Barkin has a hard time declaring it as such. The Reserve Bank of Australia (RBA) notes that some measures of inflation expectations are edging up and expresses concern about the persistence of inflation and the strength of the economy. Bostic emphasizes the need to bring down high inflation and expects spending and demand to continue slowing, requiring more work to be done on inflation.