Un clavier d'ordinateur dont deux touches ont été changées. Une représente le drapeau canadien, l'autre est rouge et il est incrit "inflation" dessus.

Businesses expect inflation to persist

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Businesses believe inflation will return to the central bank’s 2.0% target in three years, the report adds.

“If we still had to justify a half-point rate hike in April, the Bank of Canada’s Business Outlook Survey did, at least in terms of expectations for the ‘inflation,” CIBC chief economist Avery Shenfeld said in a note.

Avery Shenfeld admits the survey “statistically has no predictive power,” but believes the Bank of Canada is watching business sentiment and these results closely.

” The [Banque du Canada] will note that a strong majority see inflation above 3.0% for the next two years, and this is something they want to build on,” said Avery Shenfeld.

Royal Bank economist Nathan Janzen added in an interview that the new data further reinforces the Bank of Canada’s desire and intention to act more aggressively on interest rate hikes. .

“It will certainly be more dynamic than what we saw coming out of the recession of 2008-2009, or even the collapse of oil prices in 2015,” said Nathan Janzen.

The report also found that the number of companies facing supply chain challenges was at an all-time high, and that these pressures continue to impact the ability to meet growing demand. Persistent labor shortages are also aggravating bottlenecks, the report said.

About half of Canadian companies surveyed also expect to face upward cost pressures from rising energy and commodity prices due to the war in Ukraine, additional research shows. conducted in March to complement the Business Outlook Survey.

However, the impact of Russia’s invasion of Ukraine on sales, capital spending and hiring targets was still unclear.

Despite these hurdles, the report says Canadian businesses expected strong sales growth in 2022, albeit at a more moderate pace than last year. Signals of increased domestic and foreign demand are helping to fuel healthy sales expectations, the report adds.

The Bank of Canada also pointed out that Canadians’ near-term inflation expectations were at a record high in the first quarter of 2022, according to results from its quarterly consumer expectations survey, which the central bank also released. published on Monday. In addition, consumers are increasingly worried about the ability to control this inflation.

The consumer survey also revealed that Canadian workers are not seeing their wages rise enough to keep pace with inflation.

However, many Canadians do not expect high inflation to persist forever, the report adds. The consumer survey revealed that Canadians expect inflation to be stable over the long term.

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