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This monthly newsletter features the latest research publications by Bank of Canada economists including external publications and working papers published on the Bank of Canada’s website.

The Market Participants Survey results are based on questionnaire responses from about 28 financial market participants.

The Market Participants Survey results are based on questionnaire responses from about 30 financial market participants.

The Market Participants Survey results are based on questionnaire responses from about 30 financial market participants.

Commentary and technical data relating to the 2006 target renewal.

The Canadian economy continues to adjust to developments in the global economy, such as stronger world demand, higher commodity prices, and the realignment of world currencies, including the Canadian dollar.

Cover page

Brass Cash Register, 1910

The register is part of the National Currency Collection, Bank of Canada.

Photographed by Gord Carter, Ottawa.

The Market Participants Survey results are based on questionnaire responses from about 30 financial market participants.

The Canadian economy is adjusting to steep US tariffs on several industries and coping with elevated uncertainty. Tariffs have led to a fall in the demand for Canadian goods, affecting the broader economy. The reconfiguration of global trade and domestic production is also leading to higher costs. Total inflation has been around 2%, while underlying inflation has continued to be about 2½%.

Consumers believe inflation has fallen, but their expectations for inflation in the near term are showing little progress in returning to pre-pandemic levels. Slow progress may be due to persistently high inflation expectations for services such as rent. In addition, consumers increasingly think domestic factors, such as high government spending, are supporting high inflation, and they believe these factors will take longer to resolve than global factors. Consumers have adjusted their behaviour in response to prolonged high inflation—more people are paying attention to inflation and changing their spending habits. However, actions that may support inflation, such as seeking wage increases to offset it, are dissipating. The negative effects of high interest rates are broadening, and indicators of household financial stress are deteriorating. Consumers remain uncertain about the economic outlook, and this uncertainty is weighing on their spending plans. Workers think the labour market has weakened slightly. However, expectations for wage growth remain high, supported by cost-of-living adjustments in some workers’ wage contracts.