Most Firms, Households See The Iran War Driving Inflation Up, But Not By Enough for a Bank of Canada Response, Says Desjardins

12:36 PM EDT, 04/20/2026 (MT Newswires) -- While shorter-term inflation expectations understandably rose as a result of the Middle East conflict, longer-term expectations remained largely anchored, even for those who responded to the surveys after the spike in global oil prices, said Desjardins following Monday's release of the Bank of Canada Q1 business (BOS) and consumer surveys (CSCE).

With companies anticipating a pullback in household discretionary spending, many firms say they will have even more trouble passing on the higher input costs, noted the bank.

On that front, consumers across the country expect the net impact of higher global oil prices to be negative for the Canadian economy, with many households having reduced plans for spending in response, Desjardins pointed out.

So, while the evolution of inflation expectations still merits close monitoring, central bankers face some stark trade-offs in terms of a fragile economy, added Desjardins.

With limited information in hand, the bank expects the BoC will report next week that it is still too early to decide whether any action will ultimately be warranted. That said, Desjardins believes that policymakers will leave rates unchanged for the remainder of the year even if oil prices remain elevated for another few weeks.

Many of the other responses to survey questions appear to have been submitted before the outbreak of war in the Middle East. As a result, they are now "stale" and convey less signal, according to the bank.

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