Canada: Businesses upbeat despite trade turbulence - ING

"Business prospects for Canada are encouraging, with most indicators from the Bank of Canada’s Autumn Business Outlook Survey pointing to buoyant activity," ING analysts said referring to the quarterly report by the Bank of Canada on Monday.

Key quotes

"This suggests that the central bank will continue to raise rates gradually, with the next hike likely coming next week. The short-term business outlook in Canada remains robust. That’s the message from the Bank of Canada’s (BoC) Autumn Business Outlook Survey, which pointed to solid activity even before the recent trade breakthrough. Strong demand, investment and employment intentions have helped to keep the indicator near record levels."

"A big question for policymakers at the moment is how the recent increase in trade tensions will feed through to inflation. Certainly, the latest survey showed input prices rising fairly sharply, although the recent rise in oil prices is likely to be a more significant factor here. So far, the impact of tariffs on consumer price inflation has been fairly limited, and it’s likely that competition will see some firms opt to absorb a large chunk of the extra costs."

"In general, we expect headline inflation to ease over the coming months as energy base effects kick in. But with most measures of core inflation around the BoC’s 2% target, we expect the central bank to hike rates when it meets next week."