Bank of Canada releases Q3 Business Outlook Survey ahead of October rate call
In brief
- Bank of Canada released its third-quarter Business Outlook Survey.
- Senior managers at about 100 firms are covered by the survey, which reflects business-sector GDP.
- Previous quarter's survey showed weaker sentiment and higher inflation expectations, tied to fuel costs.
- Inflation data, jobs figures and oil prices are the next indicators markets will watch.
What the survey measures
The survey is built from the views of senior managers at approximately 100 firms across Canada. The sample is designed to reflect the country's business-sector GDP. That's what gives it weight (it isn't a poll of a few large companies).
A Crypto Briefing report described the survey as providing insights into business sentiment and inflation expectations. Both of those feed into how the market reads monetary policy.
Last quarter's backdrop
The previous survey wasn't a pretty read. It reported a decline in business sentiment and increased inflation expectations, and the report put that down to rising fuel costs and geopolitical uncertainty.
That pairing (weaker confidence alongside higher expected inflation) is an awkward one for a central bank to manage, because the two point policy in different directions.
The latest results are being monitored for potential shifts in those trends and what they'd mean for monetary policy. Did sentiment recover? Did inflation expectations cool off, or keep climbing?
That's the comparison that matters here.
What markets watch next
Market participants were expected to look for further comments from Bank of Canada officials, including Governor Tiff Macklem and Senior Deputy Governor Carolyn Rogers. Upcoming inflation data and employment figures were also cited as indicators that may influence market pricing for the October interest rate announcement.
Oil is the other variable. According to the report, shifts in global oil prices and their impact on Canadian inflation are factors that could affect future monetary policy decisions. Fuel costs drove last quarter's rise in inflation expectations, so it's a thread that runs straight from the old survey into the new one.
Next up are the inflation and jobs releases, plus any comments from Macklem or Rogers. Those will show whether this quarter's survey changes how the October decision is priced.
Frequently asked questions
What is the Bank of Canada's Business Outlook Survey?
It's a survey the Bank of Canada runs that gathers views from senior managers at about 100 firms across Canada, chosen to reflect the country's business-sector GDP. It's used as a read on business sentiment and inflation expectations.
What will markets watch before the Bank of Canada's October rate announcement?
Market participants are watching for comments from Governor Tiff Macklem and Senior Deputy Governor Carolyn Rogers, plus upcoming inflation and employment data. Shifts in global oil prices and their effect on Canadian inflation were also cited as factors that could affect future policy.
