The Bank of Canada stated that it will rely on judgment amid global uncertainties.

Investing.com — Meeting minutes from the Bank of Canada released on Wednesday showed that, due to escalating global uncertainty, the bank’s management committee will rely more heavily on judgment than usual when making interest-rate decisions.

The central bank kept its benchmark interest rate unchanged at 2.25% on March 18. Governor Tiff Macklem said the committee will disregard the direct impact of the Iran war on inflation, but will respond if inflation persists.

The Iran war has driven a surge in benchmark crude oil prices and sparked broader concerns about rising inflation.

The interest-rate decision committee, made up of seven members, said it is still too early to gauge the long-term impact of the conflict.

In its deliberation summary, the bank said: “They acknowledge that they need to rely more on judgment than usual and take a risk-management approach to monetary policy.”

The summary added: “They agreed to keep options open while closely monitoring the evolution of the conflict in the Middle East, U.S. trade policy, and the latest data.”

Since last October, the central bank has kept its policy rate at the lower bound of the neutral range. Over the past year, the inflation rate has remained near the midpoint of its target control band of 1% to 3%.

The committee said that, given that inflation pressures appear to be relatively mild, they have some flexibility on interest rates; “therefore, it is possible to spend some time observing how the Iran war evolves and what it means for the outlook.”

In recent months, economic growth and the job market have weakened under the impact of trade uncertainty and the planned review of the U.S.-Mexico-Canada Free Trade Agreement.

Committee members agreed that the energy price shock sparked by the Iran war will push up inflation in the short term, but that, at this stage, its impact on the economy is still uncertain.

After President Donald Trump suggested the conflict could end in two to three weeks, money markets are expected to raise rates twice in the second half of the year.

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