The country’s central bank’s survey of executives paints a picture of an economy still pressed up against its limits.
Canadian businesses are facing unprecedented challenges meeting demand, along with elevated expectations for wages and inflation that will bolster bets for aggressive rate hikes from the Bank of Canada.
The central bank’s quarterly survey of executives paints a picture of an economy still pressed up against its limits. Four-fifths of companies said they would have at least some difficulty meeting unexpected demand, a record. About 70% of respondents expect annual consumer price gains to surpass 3% over the next two years, also a record, with reports of higher expected wage growth pervasive.
The rising cost and inflation outlook will only cement bets that the Bank of Canada is poised to drive up borrowing costs sharply in coming months. Markets are pricing in a nearly 80% chance the central bank will hike its policy rate —…