December’s Job Market and Its Impact on Interest Rates
December marked a strong showing in Canada’s job market, with 91,000 net new jobs created— the highest since early 2023. However, these gains shouldn’t be seen as permanent trends due to the inherent volatility in monthly reports and the fact that most of the growth was concentrated in the public sector.
The Bank of Canada remains committed to cutting interest rates further this year until inflation returns within its target range of 1.5% to 2.5%. Experts caution against prematurely celebrating these December numbers, emphasizing that the longer-term outlook is influenced by factors like potential tariffs and elevated company inventories, which could introduce additional risks.
While some financial institutions suggest cautious optimism about future job growth, others highlight the possibility of a rate pause in January or subsequent months if inflation fails to rebound. This balanced perspective underscores the need for careful consideration as the economic landscape evolves.
