Canadian businesses keep investment spending below average due to weak demand outlook: BoC survey

Canadian businesses expect interest rates to come down by up to 100 basis points over the next year but their investment spending remains below average owing to a weak demand outlook, the Bank of Canada said on Monday in its second-quarter survey.

The business outlook indicator, a metric of how business prospects look like under current economic conditions, fell to –2.9 per cent in the second quarter from –2.39 per cent in the quarter earlier. Some 41 per cent of respondents thought that inflation would be above 3 per cent for the next two years, a tick higher than the 40 per cent in the previous quarter, while 20 per cent of the firms expect Canada to be in recession in the next 12 months, down from 27 per cent.

Financial markets see a 73 per cent chance of another 25 basis point cut at the bank’s July 24 interest rate announcement.

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