- 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.”
This article was written by Adam Button at www.forexlive.com. Source