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MNI (London)
By Greg Quinn
     OTTAWA (MNI) - Companies aren't expecting deflation in Canada even as its
major oil producers struggle with a price collapse and demand generally is hit
by shutdowns linked to the coronavirus pandemic.
     The view of firms polled by the Canadian Federation of Independent Business
is more optimistic than the central bank's April 15 projections that the
12-month inflation rate could remain negative into early next year in a
worst-case scenario. Policy makers declined to give a regular forecast, but said
consumer prices would likely stall this quarter.
     The CFIB poll published Wednesday had an average pricing estimate over the
next year of 1.2%, still within the BOC's target range of 1% to 3%. Expected
wage gains will be slower at 0.5%, but that's still resilient after 1 million
people lost their jobs in March and millions are filing for relief payments.
     --EXPECTATIONS 
     The findings are significant for a central bank that was among the most
successful across the major economies before COVID-19 outbreak at keeping price
gains close to a 2% target. That was in part because companies and households
never saw a long phase of sluggish prices that could have sapped expectations
about prices, something that was happening before the pandemic in the U.S. and
Japan. 
     The CFIB's overall Barometer reading at 46 is still about 20 points below a
level that signals a normal economy, and 48% of firms plan to cut full-time
staff. 
     The survey showed 40% of firms expect no changes in prices over the next
year, while 11% saw them up by at least 6%. Some 14% of the respondents said
prices will decline. 
     The BOC cut rates to around zero earlier this month and expanded plans to
buy government and corporate debt to stabilize financial markets. 
--MNI Ottawa Bureau; +1 613-314-9647; email: greg.quinn@marketnews.com
[TOPICS: M$C$$$]
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com