Bank of Canada Poised for Another Rate Cut as Business Outlook Remains Weak

The Bank of Canada’s latest Business Outlook Survey for Q3 points to a slowing economy and continued weak business sentiment, reinforcing expectations for another rate cut next week.

Between early August and September, businesses across Canada reported sluggish demand, soft sales growth, and little urgency to hire or invest. While retail spending showed some improvement, key sectors like manufacturing and agriculture continued to struggle under global trade uncertainty and reduced export demand.

Labour shortages have eased, with more Canadians entering the job market but struggling to find work. Most firms expect cost pressures to rise faster than selling prices, further limiting profit growth. Inflation expectations have eased to around 3%, keeping the door open for rate cuts.

In short, with weak demand and low inflation risk, the Bank of Canada has room to lower rates again—though fiscal measures announced in November’s federal budget could shift that outlook moving forward.