Canadian Dollar: BoC minutes watched for inflation tone – TD Securities

TD Securities strategists expect the Bank of Canada’s (BoC) Summary of Deliberations to shed light on the July decision, focusing on how policymakers view inflation amid recent energy price moves and Consumer Price Index (CPI) forecast revisions. They look for confirmation that inflation expectations remain anchored, limited pass-through to core inflation, and any fresh comments on trade uncertainty after prior guidance on trade-related rate cuts was removed.

Focus on inflation expectations and trade

"The Bank of Canada's Summary of Deliberations will provide some added context for the July policy decision when published Wednesday afternoon, where we will be focused on the discussion around the evolution of the Bank's inflation outlook amid the recent pullback in energy prices and upward revisions to the Bank's CPI forecasts."

"We look for the minutes to note that inflation expectations remain anchored and that higher energy prices have not yet spilled into core inflation measures."

"We will also be looking for any comments around trade uncertainty after the Bank removed the language around new trade restrictions leading to potential rate cuts from its guidance in July."