The Bank of Canada released its latest quarterly Business Outlook Survey today, pushing economists to conclude that interest rate hikes are likely on hold for the next few months.

BMO Nesbitt Burns says that the report, “does nothing to clear up the policy outlook. There are as many tidbits for the hawks as there are for the doves.”

“The latest survey sends mixed messages for the Bank, but there is nothing here to prompt them off the sidelines in either direction anytime soon. Normally, the tightness of capacity would have them in rate-hiking mode, but that is largely offset by the growing concerns of firms over the currency’s impact and the benign inflation outlook from industry,” Nesbitt concludes.

RBC Capital Markets says that the outlook for business activity remains largely positive, led by both employment and investment. “The biggest change from the last quarter was seen in the outlook for prices. Input prices are expected to grow at a slower pace, or even decline during the next year… Similarly, growth in output prices is also expected to slow,” it says.

“The key question on spare capacity shows things tightening a bit,” Nesbitt adds. “Accordingly, more are planning to ramp up investment and hiring. However, firms are less upbeat about the sales outlook over the next year than at any time since 2001. As well, they see fewer labour shortages, and fewer are planning to raise selling prices. Amid these mixed signals, the bottom line for the Bank is that ‘inflation expectations have changed very little from the last survey’.”

Also, Nesbitt notes that in a supplementary survey, the Bank asked firms to gauge the impact of the strong Canadian dollar. “An increased share (55% versus 45% last quarter) now reports being adversely affected,” although it points out that. “The survey was conducted between mid-November and mid-December, when the currency was close to its peak.”

Notwithstanding this report, RBC says the bulk of market attention this week likely will be directed at Wednesday’s consumer price index for December. “Headline inflation is expected to rise by 2.4% on an annual basis, while core inflation is expected to increase at a more modest 1.7%. Barring any major surprise in the numbers, the Bank of Canada looks to be firmly on hold until at least the second half of this year,” it concludes.