BoC Survey Shows Easing Tariff Fears Amid Subdued Canadian Business Outlook

The Bank of Canada's recent surveys reveal that Canadian businesses and consumers continue to face uncertainty due to tariffs and a slowing economy, although the worst-case trade scenarios seem less likely. Approximately 28% of firms now expect a recession in Canada within the next year, a slight decrease from previous quarters, while sales outlooks remain largely pessimistic, particularly among exporters. Inflation expectations among firms have eased somewhat, but many report higher costs and limited ability to raise prices due to competitive pressures and weak demand. Consumer confidence remains subdued, with many households cautious about spending and concerned about job security amid a soft labor market. These findings come as the Bank of Canada prepares for its upcoming interest rate decision and monetary policy report, with expectations that the policy rate will remain unchanged at 2.75%. Overall, businesses are maintaining staffing levels and limiting investment primarily to maintenance, reflecting cautious optimism amid ongoing economic challenges.