The central bank’s quarterly Business Outlook Survey showed companies expect inflation will still be above three per cent in two years, while consumers said in a separate survey that they think inflation will be around four per cent at the end of 2025. The Bank of Canada’s target is two per cent. (The Logic) 

Talking point: Sentiment can be unreliable: for example, the Bank of Canada’s survey of consumer expectations found that respondents thought current inflation was 5.9 per cent, even though Statistics Canada’s latest reading was 3.1 per cent. Still, if businesses and households expect prices will remain elevated, then they likely will adjust their behaviour accordingly, making inflation a self-fulfilling prophecy. One of the reasons the Bank of Canada has raised interest rates so aggressively is to keep that psychology from taking hold. These data make an interest-rate cut this spring, which the bank indicated last month could be on the table, highly unlikely.