Inflation expectations fall in BoC surveys but remain too high

Bloomberg report Canadian economy is properly responding to the interest rate increases. The tight labour market is expected to improve with impact of coming aggressive immigration increase policies.

Snippets from Bloomberg article:

The central bank’s business outlook indicator fell to -1.1 in the first quarter, from 0.1 previously. Firms expect slower sales growth for the fifth straight survey, due to higher interest rates, high inflation and concern about a recession.

The data suggest the Bank of Canada’s aggressive rate increases over the past year are working to drag down inflation expectations, and are starting to cool the domestic economy.

Consumers, meanwhile, said the central bank’s ability to bring inflation down is hampered by high government spending. Last week, Finance Minister Chrystia Freeland released a budget that sent Canada deeper into deficit with C$43 billion ($32 billion) in net new costs over six years.

About half of firms have incorporated the risk of a recession over the next year into their business plans. They expect any potential downturn to be mild, with some saying they’re less likely to add staff or increase investment spending.

Tags #canada #economy #business-outlook