BoC Deputy Governor Kozicki: Many businesses expect activity to weaken in the near term

Bank of Canada (BoC) Deputy Governor Sharon Kozicki warned on Thursday that a growing number of Canadian businesses are bracing for a general slowdown in overall activity in the coming months, which could undercut job growth performance and put downward pressure on the Canadian economy.

Key highlights

The firms and associations were those particularly affected by trade tensions.

The latest consultations took place from mid-April to mid-May after an earlier round in January.

Some firms and industry associations consulted by BoC ahead of June 4th rates decision believe worst-case tariffs scenarios are much less likely to materialize.

Firms spoke about costs increasing, which likely means they will need to raise prices at some point.

While uncertainty remains high, there was less talk of catastrophic outcomes.

Firms have now started seeing concrete impacts on their performance and are finding it challenging to formulate outlooks.

Many businesses expect activity to weaken in the near term, which puts jobs at risk.

BoC's GC considered this information with other data and analysis in deciding to keep policy rate unchanged.

The BoC is relying more on non-traditional data and surveys as well as outreach to get a better understanding of how the economy is performing.