- 64% of firms expect inflation to remain above 3% for the next two years, down from 79% in Q1 survey
- Demand for labor is softening as sales expectations moderate
- Indicator of future sales -6% vs -18% prior
- Firms expect input and output prices to grow at a slower rate
- More firms than in Q1 think it will take five or more years for inflation to return close to 2%
- Firms see price pressures easing due to factors, including weaker commodity price rises and softer demand
Separate highlights from the consumer survey:
- Expectations for 5-year inflation to 2.89% from 2.92%
- Consumers think interest rates will drop in next 12 months
- Expectations for 1-year inflation to 5.09% from 6.03%
- 2-year inflation to 3.93% from 4.27%
The odds of a Bank of Canada hike on July 12 are at 61%. That sounds about right based on what BOC officials have been saying but I’ll quote what I told Reuters yesterday.
“A July hike is unnecessary,” Button said. “The Bank of Canada is going to see economic weakness developing in Canada.”
