Varun Kohli February 7, 2022 No Comments

A recent BOC survey of Canadian business shows that entrepreneurs are worried about supply chain issues, labour shortages, and ability to meet consumer demands – especially if high inflation persists and higher rates kick in. Over two-thirds of respondents expect annual inflation to surpass 3 per cent over the next two years. About 80 per cent say worker shortages are intensifying and their companies would have at least some difficulty meeting unexpected demand. Businesses are increasingly voicing their need and openness to increase production to meet demand which is expected to keep going up. The numbers were 62 per cent anticipating that they’ll increase investment in machinery and equipment over the next year, and 80 per cent planning to grow employment levels and wages.

 

A different survey of Canadian consumers showed that anxiety over inflation extends to average people. Most households expect inflation to stay above 3 per cent over the next couple of years. Average Canadians project 4.89 percent inflation in the next year, 4.12 per cent in two years and 3.5 per cent in five years. Two-thirds of Canadians say inflation has become more difficult to control. The next interest rate decision will be later this month and many expect this to be the starting point of higher rates in Canada. In the U.S., a similar survey shows that two-thirds of Americans expect the Fed to raise rates at its March 15-16 policy meeting and keep raising them over the course of the year. Over half of forecasters expect three rate increases this year, while nearly a third expect more than three.

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