Team boss Toto Wolff echoed Hamilton's sentiments, saying they simply weren't quick enough - especially disappointing at a circuit where Mercedes have traditionally been very strong.
"On Friday the auto balance was great into [Turn] 10".
Max Verstappen, who was quickest in all three pre-qualifying practice sessions, placed third and will start in the second row next to Hamilton, whose run of three straight Canadian poles ended.
"There's a massive bumps into Turn 10". "Yesterday we were in trouble in practice as I wasn't really happy with the auto because we had some problems and I couldn't get the rhythm".
"I got the job done", he said.
"To be third is great for us and I think in the race we can do a really good job".
"Then we will see where we are tomorrow".
When asked if he felt Red Bull had the pace for pole after seeing teammate Daniel Ricciardo go quickest in Q2, he said: "I knew we had a good auto, but I wanted to wait and see how competitive we would be in Q3".
Mercedes struggled on the hypersoft in Monaco and avoided the compound completely until the end of Practice Three on Saturday after selecting only five sets for the weekend, three fewer than their direct rivals.
"Now he's in the spotlight, the P3 crash [in Monaco] wasn't a small error, but any small error now he is probably going to get a little bit picked apart from", he said, per Sky Sports.
"From our testing we had in Abu Dhabi [last December] particularly, that's what led us to the decisions we made and we stick with those".
"It was great to carry the momentum we've had this year into qualifying", said Vettel, who took pole position for the fourth time in seven races this season. I just do my own thing. I felt it was there but it didn't step up and I couldn't get to it.
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His McLaren team-mate, Stoffel Vandoorne, will start a place behind him, and Kevin Magnussen, Brendon Hartley and Charles Leclerc also missed out on a top-10 berth on the grid.
"Because people tried to stay out of his way they all braked, and went really slow in a fast bit of the track to let him past". Yesterday was very hard but today I switched on.
"If we had brought the engine upgrade it would have been an advantage. This is going to make the difference in winning or losing the weekend".