Bay Street weighs 'shock and awe' from BoC after job surge
BNN Bloomberg
The scorching-hot employment landscape has convinced economists of the need for additional rate hikes from the Bank of Canada. The only question is how many, and how quickly.
Canada's notoriously hard-to-predict labour market didn't disappoint in February. Almost 337,000 jobs were added in the month, far outpacing expectations. And the unemployment rate fell a full percentage point to 5.5 per cent, close to the record low of 5.4 per cent that was registered in May 2019.
The scorching-hot employment landscape has convinced economists of the need for additional rate hikes from the Bank of Canada. The only question is how many, and how quickly.
Here's a roundup of some commentary from reports to clients on Friday morning:
"The Canadian labour market brought the heat in February and turned the temperature up on the Bank of Canada to deliver more interest rate hikes. ... We expect a series of four straight interest rate hikes (including the one already delivered) before a pause as the bank assesses the impact of those on the economy. However, given strong data like today's, the risks around that forecast are tilted towards more, rather than fewer, rate increases before such a pause."
-Andrew Grantham, economist, CIBC Capital Markets
"The Bank of Canada still seems likely to eschew a 50-basis-point rate hike, since such a ‘shock and awe’ type move risks further damaging household and market sentiment at a time when they’re already fragile."
