Canadian Business and Consumer Confidence Rises, But U.S. Tariff Threats Loom

Bank of Canada surveys show optimism fueled by rate cuts, though trade tensions with the U.S. create uncertainty.

Bank of Canada surveys highlight improving business and consumer sentiment, with firms expecting better sales and consumers planning increased spending.
Recent interest rate cuts, which lowered the policy rate to 3.25% from 5% since June, have spurred economic optimism and investment plans.
Despite this optimism, 40% of businesses anticipate negative impacts from potential U.S. trade policies under President Donald Trump, including possible tariffs on Canadian imports.
Inflation expectations are stabilizing, potentially allowing the Bank of Canada to continue easing monetary policy, with markets expecting another rate cut on January 28.
Concerns persist about economic uncertainty, with consumers citing job security fears and businesses remaining cautious about trade and regulatory challenges.