The Bank of Canada expects to be able to start cutting interest rates sometime this year, but officials are divided over the timing.

This is according to the central bank's summary of the discussions that include details of the talks held by board members in the period preceding the interest rate announcement on March 6.

The summary explained that board members agreed that if the economy and inflation develop in line with the Bank of Canada's expectations, the central bank would be able to start cutting interest rates sometime this year.

While members agreed on the conditions the Bank of Canada needs to begin lowering the interest rate – they want to see continued easing in a set of indicators they call "core inflation" – they had differing views on when these conditions would be met.

The summary said: "There was some diversity in views among board members about when there would likely be enough evidence that these conditions exist, and how to assess the risks to the outlook."

The Bank of Canada chose to keep the interest rate at five percent earlier this month and ignored questions about the timing of rate cuts.

Governor Tiff Macklem said the central bank does not want to move too quickly, but had to reverse course later.

The Federal Reserve holds the key interest rate again

On Wednesday, the US Federal Reserve also announced it would keep the key interest rate unchanged for the fifth consecutive meeting.

Officials at the central bank indicated they still expect to cut the key interest rate three times in 2024 despite signs that inflation remained surprisingly high at the beginning of the year. However, they expect fewer rate cuts in 2025 and have slightly raised their inflation forecasts.

In contrast, the Bank of Canada is more cautious about its decisions regarding future policy. But Macklem noted that the central bank will not cut interest rates at the pace it raised them.

In Canada, recent data shows the annual inflation rate came in lower than expected for the second consecutive month, reaching 2.8 percent in February.

Recent inflation figures have strengthened economists' expectations that the Bank of Canada will start cutting interest rates around mid-year.

However, the summary indicates that the central bank is very concerned that inflation risks are trending higher than expected, especially with housing costs continuing to rise.

It added, "If the housing sector recovers in the spring, housing price inflation could rise, delaying the return of consumer price inflation to the 2 percent target. And if inflation proves to be more persistent than expected, monetary policy is likely to remain restrictive for longer."

Housing costs in February were 6.5 percent higher than a year ago. Mortgage interest costs and rent were the largest contributors to inflation that month.

The next Bank of Canada interest rate announcement is scheduled for April 10.