The Bank of Canada is scheduled to release its third-quarter Business Outlook Survey and the Canadian Survey of Consumer Expectations on October 19 at 11:30 a.m. ET. These reports will offer essential data regarding economic sentiment and inflation expectations just nine days before the central bank's next interest rate decision on October 28.

What do these surveys measure?

The Business Outlook Survey is compiled from interviews with leaders from approximately 100 firms, selected to reflect the composition of Canada's gross domestic product. This data helps officials understand how companies view their economic environment and future prospects.

The Canadian Survey of Consumer Expectations focuses on household perspectives. It measures views on several key areas:

  • Inflationary trends
  • The state of the labour market
  • Household financial health
  • Other topical economic issues

Why is the timing significant?

Policymakers are closely monitoring whether high energy prices are causing inflation to spread across the broader economy. While gasoline and heating oil costs have risen significantly, economists are watching to see if these pressures permeate other sectors.

Nathan Janzen, an assistant chief economist at RBC, noted that the central bank must weigh inflationary risks against a softening economy. Recent data shows the economy lost 68,000 jobs in September, marking a second consecutive month of employment decline.

Balancing inflation and growth

As the Bank of Canada prepares for its late-month decision, it faces a complex trade-off. While energy costs remain a primary driver of inflation, a slowing GDP and a plateauing unemployment rate of approximately 6.5% provide offsetting disinflationary forces.

Market participants are using these upcoming surveys to gauge the likelihood of a rate change. Currently, financial market odds for a quarter-point rate hike sit at approximately 34%, according to LSEG Data & Analytics.

FAQ

When is the next interest rate decision?

The Bank of Canada will announce its next interest rate decision and release its Monetary Policy Report on October 28 at 9:45 a.m. ET.

Who is included in the Business Outlook Survey?

The survey includes business leaders from about 100 firms that represent the various components of Canada's gross domestic product.