The Bank of Canada faces a tighter growth\u2013inflation trade-off going into its next decision, after the Q3 Canadian Business Outlook Survey showed firmer conditions running into August but softer sentiment following the breakdown in Canada\u2013US trade talks. Inflation expectations moved higher over the period, complicating the policy outlook just as financial conditions are being tightened by rising bond yields and higher borrowing costs for firms and households.<\/p>\n\n
Market pricing for an October move strengthened after the Governor\u2019s hawkish remarks, yet the latest data offered mixed signals. September CPI showed core inflation measures averaging 1.9%, and a separate consumer survey pointed to weaker spending intentions.<\/p>\n\n
One major bank\u2019s base case remains for no rate increases until 2027, while conceding the balance of risks leans towards an earlier shift, potentially as soon as the next meeting.<\/p>\n\n\n\n