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Weak Jobs Data Sends BoC Rate Cut Odds Soaring to 90%
Bank of Canada governor Tiff Macklem
The likelihood of a Bank of Canada (BoC) interest rate cut at its September 17 meeting has surged to 90%, according to market pricing, after a string of disappointing labour market data intensified concerns about the country’s economic momentum.
Canada’s job market showed fresh signs of strain, with recent reports revealing significant employment losses across multiple sectors, including manufacturing, construction, and retail. The July Labour Force Survey recorded a drop of 41,000 jobs, the largest monthly decline in seven years, while Statistics Canada’s payroll data pointed to broad-based weakness beyond tariff-impacted industries.
The soft labour readings come on the heels of a 1.6% annualized GDP contraction in the second quarter, driven by plunging exports and ongoing trade tensions with the U.S.. Economists say the combination of slowing growth, rising unemployment, and building slack in the economy is creating strong pressure for the BoC to ease policy.
Some analysts now expect the central bank to kick off a rate-cutting cycle this month, with additional reductions possible before year-end. While a minority still argue for holding rates steady to assess inflation trends, markets are overwhelmingly betting that policymakers will act swiftly to support the weakening economy.
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