Browse publications

Business conditions have deteriorated due to the trade conflict with the United States, according to results from the Business Outlook Survey and the Business Leaders’ Pulse. Sales outlooks have softened, particularly for exporters. Firms reported having sufficient capacity, and many are delaying investment and hiring decisions amid uncertainty. Firms expect that widespread tariffs would raise costs and lead to higher selling prices. In this context, expectations for inflation are higher than they were last quarter.

Overall, results of the first-quarter 2025 survey show that the escalating trade conflict with the United States is damaging consumer sentiment. Confidence in the labour market has weakened significantly, and consumers have become more pessimistic about their financial health. Although consumption plans had been improving over the past several quarters, consumers now intend to spend more cautiously given the uncertainty around the trade conflict. They expect the trade conflict to lead to a higher cost of living, and this has pushed up their inflation expectations.

This is an account of the deliberations of the Bank of Canada’s Governing Council leading to the monetary policy decision on March 12, 2025.

We consider ways central banks could adapt in the event of an increased risk of a dash for cash from asset managers. We explore ideas such as new facilities that ease asset managers’ ability to convert existing assets to cash or new assets with liquidity that central banks would guarantee.

Why prices change, and what it means for the economy.

This is an account of the deliberations of the Bank of Canada’s Governing Council leading to the monetary policy decision on January 29, 2025.

The Market Participants Survey results are based on questionnaire responses from about 30 financial market participants.

Economic growth has ticked up in Canada, boosted by past cuts in interest rates. In the absence of new tariffs, growth is forecast to strengthen, and inflation remains close to 2%. But the threat of new tariffs is causing major uncertainty.

Results from the Business Outlook Survey and the Business Leaders’ Pulse show that overall business conditions remain subdued, but firms are beginning to anticipate improvements in activity. Sales outlooks continue to show signs of improvement after a period of weakness. Yet many businesses still have spare capacity, which is reducing their need to expand. Firms expect cost growth, including wages, to soften further. Expectations for inflation moved slightly higher but remain within the Bank of Canada’s target range.

Results from the CSCE show that consumer sentiment improved this quarter, mainly due to recent interest rate cuts and the expectation of further cuts ahead. Consumers reported stronger spending plans. Still, they reported that high prices of many goods and services, economic uncertainty and elevated housing costs continue to weigh on spending decisions. Consumer confidence in the labour market has weakened and is now slightly below the survey average. Consumers’ inflation expectations have largely returned to historical norms.