Bank of Canada Splits Outlook Gauge as Iran War Lifts Recession Fears to 17%
Updated
Updated · CBC Sports · Jul 6
Bank of Canada Splits Outlook Gauge as Iran War Lifts Recession Fears to 17%
2 articles · Updated · CBC Sports · Jul 6
Summary
The Bank of Canada introduced two separate business-outlook measures after the Iran war simultaneously weakened sales confidence and intensified price pressures, making its single benchmark harder to interpret.
Business surveys showed recession expectations jumped to 17% in the second quarter from 9%, while firms reported rising input costs and geopolitical uncertainty that hurt sales expectations outside Prairie oil and gas.
Inflation expectations among businesses hit a roughly four-year high as energy prices spiked, though follow-up surveys showed those expectations peaked in April and eased after a mid-June peace deal.
Consumer surveys released the same day also showed higher inflation expectations and softer spending plans, with households expecting Middle East-driven price increases more likely to cut driving, seek discounts and delay major purchases.
The split indicators arrive as the BoC weighs weak activity against inflation risks ahead of its July 15 decision, where markets widely expect the policy rate to stay at 2.25%.