Bank of Canada sees worst drop in business outlook since 2020
BNN Bloomberg
Sentiment among Canadian firms fell the most since the beginning of the pandemic, with inflation expectations among consumers and businesses showing few signs of abating, Bank of Canada surveys show.
The central bank’s business outlook indicator fell to 1.69 in the third quarter, from 4.87 previously. While still positive, that’s the largest deterioration in the confidence of Canadian firms since the second quarter of 2020.
“Many firms expect slower sales growth as interest rates rise and demand growth shifts closer to pre-pandemic levels,” policymakers said Monday in the quarterly business outlook survey. Respondents noted that while they see their input and output prices easing, expectations of overall inflation remain elevated. More than three quarters of firms say inflation will stay higher than 3 per cent, the top of the central bank’s control band.
Bonds staged a modest rally after the release of the data, with the yield on benchmark Canadian two-year debt falling about two basis points to 4.098 per cent as of 10:43 a.m. Ottawa time. The loonie was little changed.
