Canada's inflation had some big swings, but unlikely to impact BoC's thinking

A net 26% of firms expect input prices to fall, while 13% anticipate cutting output prices over the next year. Firms noted that they felt most of the impact from the Canadian dollar's depreciation had already been passed through, suggesting easing price pressures. 

Inflation expectations remain firmly anchored around the 2% target, with just 3% of firms expecting sub-1% inflation, while those expecting 1%-to-2% rose by 8 ppts to 68%. Headline inflation is expected to drift higher through the second half of the year, as the steep energy price declines in 2014 fall out of the calculation, says BMO economics.

Meanwhile, businesses reported that credit conditions loosened again somewhat in Q2. The Senior Loan Officer Survey actually reported slightly tighter credit conditions, entirelyon the non-pricing side and focused on the oil & gas sector. The fact that businesses did not perceive this moderate tightening suggests that it's just something to keep an eye onfor now.