Soaring inflation expectations raise odds of super-sized Bank of Canada hike — via financialpost inflation Economy
. The results were concerning. Elevated numbers of companies continue to struggle with supply bottlenecks and labour shortages, suggesting the “presence of excess demand in the economy,” which is inherently inflationary.
Nearly half of companies said they expect wage increases will remain above pre-pandemic levels for the next 12 months, in part because workers are insisting on being compensated for a higher cost of living. Most businesses said they expect inflation will remain “substantially” above two per cent for at least a couple of years, and a quarter of respondents said they saw inflation staying that high for longer.
The survey has a relatively small sample size: the Bank of Canada’s regional offices conduct 100 interviews per quarter from a rotating roster of businesses. However, policymakers trust the results, and the report ranks as one of the most important inputs into interest-rate decisions.Short-term expectations of inflation climbed to the highest since the central bank began polling consumers in 2014.
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