Bank of Canada Q2 business outlook survey sees improving inflation expectations

<ul><li>64% of firms expect inflation to remain above 3% for the next two years, down from 79% in Q1 survey</li><li>Demand for labor is softening as sales expectations moderate</li><li>Indicator of future sales -6% vs -18% prior</li><li>Firms expect input and output prices to grow at a slower rate for fourth consecutive quarter</li><li>More firms than in Q1 think it will take five or more years for inflation to return close to 2%</li><li>Firms see price pressures easing due to factors, including weaker commodity price rises and softer demand</li><li>Investment intentions in non-resource firms 6.86 vs 12.0 prior</li><li>Average expected wage increase 4.48% vs 4.67%</li></ul><p>Separate highlights from the consumer survey:</p><ul><li>Expectations for 5-year inflation to 2.89% from 2.92%</li><li>Consumers think interest rates will drop in next 12 months</li><li>Expectations for 1-year inflation to 5.09% from 6.03%</li><li>2-year inflation to 3.93% from 4.27%</li></ul><p>The odds of a Bank of Canada hike on July 12 are at 61%. That sounds about right based on what BOC officials have been saying but I'll quote what I told Reuters yesterday.</p><p>"A July hike is unnecessary," Button <a href="https://ca.sports.yahoo.com/news/canadian-dollar-hits-2-week-200418661.html" target="_blank" rel="nofollow">said</a>. "The Bank of Canada is going to see economic weakness developing in Canada."</p><p>All they need to do is wait.</p><p>Some charts from the release:</p>

This article was written by Adam Button at www.forexlive.com.