Business sentiment was improving, but Middle East war pushing up costs
Posted Apr 20, 2026 10:02 am.
OTTAWA — The Bank of Canada says its latest survey of businesses suggested sentiment for the first quarter was improving ahead of the war in the Middle East, but in the days after the conflict began firms were already facing higher costs.
Based on the business outlook survey conducted from Feb. 5 to 25, before the U.S. and Israel attacked Iran, the central bank said companies expected improvements in sales growth and investment intentions.
However in followup calls in March, it says many firms were already facing higher costs due to rising prices for energy, fertilizer and freight linked to the war, while others expected increases in the coming months as costs are passed on by suppliers.
Meanwhile, the bank’s Canadian survey of consumer expectations indicator rose slightly from recent lows in the first quarter, but remained below where it was a year ago before the trade tensions with the U.S.
However, the Bank of Canada says a special survey conducted after the outbreak of the war suggests most households expect the war to weaken the Canadian economy and raise prices.
The Bank of Canada’s next interest rate decision is set for April 29.
This report by The Canadian Press was first published April 20, 2026.
The Canadian Press
