By Promit Mukherjee and David Ljunggren
OTTAWA, April 1 (Reuters) - The Bank of Canada's governing council has agreed it will have to rely on its own judgment more than usual on rate decisions, given heightened global uncertainty, according to minutes released on Wednesday.
The central bank kept its benchmark rate unchanged at 2.25% on March 18 and Governor Tiff Macklem said the governing council would look through the Iran war's immediate impact on inflation but would respond if inflation became persistent.
The Iran war sent benchmark crude oil prices soaring and fanned concerns of a broader spike in inflation.
The seven-member rate-setting council said it was too early to say what the long-term effect of the conflict would be.
"They acknowledged that they would need to rely on judgment more heavily than usual and take a risk management approach to monetary policy," said a summary of deliberations released by the bank.
"They agreed to keep options open while closely monitoring the unfolding conflict in the Middle East, US trade policy and incoming data," it said.
The central bank has kept its policy rate at the lower end of its neutral level - neither stimulative or restrictive - since October. Inflation has stayed around the mid-point of its target control range of 1% to 3% for almost a year.
The council said given that inflationary pressures appeared to be muted, they had some flexibility when it came to rates and "could therefore take some time to see how the war in Iran evolved and what it meant for the outlook".
Economic growth and the job market have sagged in the last few months amid trade uncertainty and a planned review of the United States-Mexico-Canada free trade deal.
Members agreed that the energy price shock caused by the war in Iran would push inflation up in the near term, but at this early stage, its impact on the economy was uncertain.
Money markets are pricing in two hikes in the second half after President Donald Trump signaled the conflict could end in two to three weeks.
(Reuters Ottawa editorial)
Keywords: CANADA CENBANK/
