
Residential Market Commentary - Coin toss on rate cut
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- Oct 15, 2024
- First National Financial LP
High hopes for a big, 50 basis point, rate cut by the Bank of Canada later this month have dimmed. A strong jobs report for September has several analysts pulling back their forecasts. They are now saying a, more traditional, 25 basis point cut is most likely.
Statistics Canada’s September employment report shows the economy added 42,000, net, new jobs, including 112,000 new full-time positions. The unemployment rate ticked down one notch to 6.5% from 6.6% in August.
Those figures are being used to support the argument that the central bank’s current policy of quarter-point cuts is working and there is no need to change.
However, economists are also looking at other aspects of the report that, they say, temper the good news. Those factors suggest September is an anomaly, given previous reports that show a job market that is not keeping pace with immigration.
They point out that the number of people who are working, or looking for work, dipped for the third time in four months; total hours worked declined and hourly wage growth slowed. All of these indicate some weakness in the economy that could justify a half-percent cut in the Bank of Canada policy rate.
Given the mixed nature of the jobs report, most economists agree that the up-coming inflation report, which is due before the next rate setting, will likely be the key factor in any decision.
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