Bank of Canada: Businesses expect inflation to fall in the short term

The Bank of Canada said in a second-quarter survey that Canadian businesses see labor pressures easing and expect inflation rates to fall in the short term. The second-quarter survey is mostly good news for the BoC as trends point to slower sales growth and more moderate wage growth.

The report stated that "although labor shortages are still common in some sectors, pressures on the labor market are easing due to reduced competition for workers and an increase in the supply of labor. Companies expect moderate wage growth from high levels." The Bank of Canada added that monetary policy was not sufficiently restrictive after the recent increase, and said it would look to economic reports such as the Business Survey to determine whether further increases are needed.