Bank of Canada survey leaves room for 50 basis points rate cut in October

Bank of Montreal Capital Markets believes the Bank of Canada's quarterly business outlook survey shows that the job market will continue to be weak despite September's employment data showing a strong recovery in full-time and private sector jobs. Businesses expect wage growth to slow over the next 12 months, with hiring intentions little changed from the previous quarter. The bank noted that the proportion of businesses reporting labour shortages remained "well below" the historical average, with companies saying immigration inflows had increased the labour supply. The bank said the survey results left room for the Bank of Canada to cut interest rates by 50 basis points, although the company stood by its expectation of a rate cut of 25 basis points. Inflation data to be released next week could help resolve a 0.25 basis point versus 0.5 basis point battle among Canadian economists.