(Bloomberg) -- Bank of Canada officials said monetary policy easing is expected to be “gradual,” as they debate the timing of a pivot to rate cuts. 

In a summary of the deliberations that led to the central bank’s decision to hold its key policy rate at 5% on April 10, members of the six-person governing council noted they had been looking for “further and sustained easing in core inflation.”

They agreed the deceleration in underlying price pressures in January and February satisfied the “further” element of their conditions, and they wanted to see this progress “sustained,” according to the summary released on Wednesday.

Last week, Governor Tiff Macklem said March core inflation was “moving in the right direction.”

The minutes-like summary suggests while officials may be nearly ready to start easing, the first cut — now widely expected in June or July — may not be immediately followed by another until they’re convinced the 2% inflation target can be reached.

“While there was a diversity of views about when conditions would likely warrant cutting the policy rate, they agreed that monetary policy easing would probably be gradual, given risks to the outlook and the slow path for returning inflation to target.” 

Some members argued the risk that restrictive policy would slow the economy more than necessary had diminished, and said stronger domestic demand and robust US growth could keep core inflation from slowing further. 

Others emphasized inflation progress and indicators suggesting the economy was in excess supply, and “felt there was a risk of keeping monetary policy more restrictive than necessary.”

Policymakers next set rates on June 5 after the release of the April inflation print. The majority of economists in a Bloomberg survey expect the bank to cut policy rates by 25 basis points at that meeting. 

Other key takeaways: 

  • Policymakers discussed the risk that housing market activity could accelerate and further boost shelter prices, but see rate cuts increasing the likelihood of this risk materializing regardless of when the pivot begins.
  • They said higher global oil prices are expected to translate into headline inflation remaining around 3% over the next few months, before easing to below 2.5% in the second half of this year.
  • They were “more confident” inflationary pressures would continue to ease even as growth picked up with excess supply persisting through the year.
  • They agreed that corporate pricing behavior was normalizing, with micro data showing firms raising prices less frequently, consistent with the bank’s surveys.
  • Business inflation expectations had continued to come down, in line with the bank’s outlook, and wage growth is expected to ease gradually in the coming quarters.

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