BoC Q3 Overall Business Outlook Survey: Shows that overall business sentiment improved in the third quarter of 2026 after deteriorating in the previous quarter

• 6% of firms expect Canada to be in a recession over the next year (prev. 17% in Q2).
• 41% of firms expect inflation to be above 3% for next 2 years (prev. 44% in Q2).
• Expectations for 5yr inflation have risen to 3.91% (prev. 3.39% in Q2).

The BoC's Business Outlook Survey has long been the Bank's preferred soft read on how its own rate path is filtering through, and it carries more weight in the reaction function than most surveys because the Bank cites it directly in its deliberations. The composition here matters more than the headline sentiment improvement: firms marking down recession odds while long-horizon inflation expectations climb is a combination that historically leans hawkish, since anchoring at the back end of the expectations curve is precisely what central banks watch to judge whether earlier easing has gone too far. The split worth drawing is between the near-term inflation readings, which are easing, and the five-year measure, which has risen sharply; episodes where the two diverge in that direction have tended to concern policymakers more than either print alone, because de-anchoring risk sits in the longer measure. Transmission typically runs through front-end Canadian rates and the short-rate spread against the US rather than through the currency directly, though CAD follows where the differential leads. The follow-ons are the parallel consumer expectations survey and how the Bank characterises the report at its next decision, particularly whether officials flag the long-run expectations drift. As a survey rather than a decision, the signal is directional and conditional on the data flow around it.