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Quarterly Financial Report - Third Quarter 2022 - For the period ended September 30, 2022

The Bank of Canada is publishing a new set of indicators of financial vulnerabilities. This will allow households, the private sector, financial authorities and governments to better understand and monitor the evolution of two key vulnerabilities in the financial system: the elevated level of household indebtedness and high house prices.

While inflation has come off its peak, it remains too high. As the economy responds to higher interest rates and as the effects of elevated commodity prices and supply disruptions fade, the Bank expects inflation to fall to about 3% in late 2023, then return to 2% in 2024.

Business confidence has softened, according to results from the third-quarter 2022 Business Outlook Survey and the July through October 2022 Business Leaders’ Pulse surveys. Many firms expect slower sales growth as interest rates rise and demand growth shifts closer to pre-pandemic levels. Early signs suggest that pressures on prices and wages have started to ease, but firms’ inflation expectations remain high.

This survey took place between August 2 and August 23, 2022. Follow-up interviews took place in September. Expectations for inflation one to two years ahead have continued to rise because consumers anticipate supply chain disruptions and elevated oil prices will persist. In contrast, expectations for inflation five years ahead have eased to near pre-pandemic levels. Still, consumers are more divided this quarter about where inflation will end up in the long term.

We present key findings from the 2021 Bitcoin Omnibus Survey on Canadians’ awareness and ownership of Bitcoin. Most Canadians have heard of Bitcoin, which remains primarily used as an investment. Ownership jumped in 2021, reflecting increased savings during the pandemic and greater availability of user-friendly platforms to buy Bitcoin.

Quarterly Financial Report - Second Quarter 2022 - For the period ended June 30, 2022

The Canadian economy is now clearly in excess demand, and inflation is high and broadening. The Bank is projecting inflation to decline to about 3% by the end of 2023, and to return to the 2% target by the end of 2024.

Differences in income, wealth and debt across households are important—for the economy, for the health of the financial system and for monetary policy.

Results from the Business Outlook Survey for the second quarter of 2022, along with those from the April, May and June 2022 Business Leaders’ Pulse surveys, suggest that capacity pressures remain elevated and expectations of significant price increases continue to be widespread. Firms anticipate that sales growth will begin to moderate from exceptionally high rates as signs of greater uncertainty emerge.