The Bank of Canada’s quarterly business outlook survey showed managers see inflation dropping to 2.9 per cent over the next 12 months, and to 2.5 per cent in two years. A separate Bank of Canada report suggests consumers’ expectations are higher, but down significantly from last year. (The Logic) 

Talking point: The Bank of Canada believes expectations of inflation influence its trajectory, and has made evidence that perceptions are adjusting downwards a condition of additional rate cuts. The public appears to doubt inflation will get back to the central bank’s target of two per cent anytime soon. Still, business expectations are back inside the Bank of Canada’s comfort zone, and consumers said they thought inflation would slow to about 4.1 per cent in a year from about 5.2 per cent currently. Officially, the consumer price index rose 2.9 per cent in May from a year earlier, the fifth consecutive month the official figure was below three per cent. Statistics Canada will update those figures Tuesday. Barring a surprise, weaker growth probably trumps inflation fears at this stage.