A rate cut on October 29 looks baked in after the Bank’s fresh surveys show sentiment stuck in low gear and inflation expectations contained. Tariffs are clogging the channels, so cheaper money will not unlock capex or hiring while trade rules stay volatile. The Business Outlook Survey published October 20 confirms outlooks remain subdued, investment plans focus on maintenance, and price‑setting power is limited.
Read The Fresh Signals
Start with the field dates. BOS interviews ran August 7 to September 3, mostly before Ottawa removed some counter‑tariffs, and CSCE interviews ran July 31 to August 21. That timing means little of the late policy relief is in the data.
Mechanically, firms report soft demand, hesitant US customers, and weak export outlooks even though most exporters are not directly tariffed. Hiring plans are flat, and the share tightening budgets for a possible recession ticked up to 33 percent from 28 percent. Those moves keep the BOS indicator below average.
Price dynamics are not flashing danger. One‑year‑ahead firm inflation expectations sit around 3 percent, longer‑term near 2.5 percent, and many say weak demand curbs pass‑through. On households, consumers still cite tariffs as the main impediment to the Bank’s inflation control, and the CSCE indicator only nudged off its low. Two‑thirds now expect a recession within 12 months. None of that argues for patience next week.
Governor Tiff Macklem captured the demand hit plainly in March, saying, “However, in recent months, the pervasive uncertainty created by continuously changing US tariff threats has shaken business and consumer confidence.” That line tells you the risk is policy made, not cyclical noise.
Watch The Transmission Jam
The schedule sets the catalyst. The Bank meets Wednesday, October 29 at 09:45 ET, after three cuts this year brought the policy rate to 2.50 percent on September 17. The surveys are timed to feed exactly that decision.
Now trace the gears. Monetary policy pulls through expectations, cash flow, credit and the currency. BOS says firms have spare capacity, muted hiring, and maintenance‑only capex, so the investment gear is disengaged. CSCE shows households still cautious on discretionary spend, so the consumption gear slips. Even the currency channel is blunted if US buyers delay orders on tariff headlines.
That is why Macklem also warned, “Monetary policy cannot offset the impacts of a trade war.”
The cut can lean against weak demand, but it cannot rewire tariff‑driven costs or restore market access.
Control sits outside Wellington Street. Washington controls US tariffs, Ottawa controls counter‑tariffs, and both control the timeline to clarity. The BOS notes most interviews occurred before some counter‑tariffs were removed, a reminder that piecemeal relief arrives off‑cycle from rate decisions. If broad tariffs fade or become predictable, hiring and investment intentions would firm first, and the pass‑through to prices would look cleaner. Until then, the Bank can smooth the landing, not rebuild the runway.
