Expecting an interest rate cut in June? Don't bet on it after new jobs data

Canada's labour market rebounded successful April, adding much than 90,000 jobs, a staggering number of caller positions aft 4 consecutive months of small change.

Now, a notable economist says that unexpected maturation isn't bully news for nan Bank of Canada, and could mean that cuts to nan key liking rate could beryllium further disconnected than expected.

"The Bank of Canada… is trying to re-attain nan 2 per cent ostentation target," Don Drummond, a professor astatine nan School of Policy Studies astatine Queen’s University and erstwhile main economist for TD Bank, told CTV News Channel. "And boy, that's a large summation successful employment.

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"Life successful nan Canadian economy"

Canada's system added astir 5 times nan number of jobs that were forecast for nan period -- while nan unemployment complaint held dependable astatine 6.1 per cent.

Drummond says nan latest information shows there's "some revised life successful nan Canadian economy" and that it's proving to beryllium harder to "kill nan beast" of ostentation than primitively expected.

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Many analysts expected nan policymakers astatine nan Bank of Canada to trim its key lending complaint astatine successful June – nevertheless nan caller numbers person The quickly put a damper connected nan marketplace speculation.

"You do person to cool nan system to a definite extent," Drummond told CTV News Channel big Roger Petersen connected Friday. "That seems to beryllium benignant of difficult… astatine slightest done liking complaint increases."

"Frustrating" information for Bank of Canada

The occupation gains are nan largest since January 2023, and according to Statistics Canada, are from a operation of some part-time and full-time work.

Drummond says that it's a cleanable illustration of nan "difficulty of conducting monetary policy" because markets are already incorporating an "easing of nan monetary policy" moreover though it's yet to return place.

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"The anticipation of liking complaint declines is narrowing immoderate in installments spreads."

So arsenic it proves harder for nan Bank of Canada to deed its 2 per cent ostentation target, what would origin policymakers to see a complaint cut?

"A much humble summation successful existent wages," according to Drummond. "I dislike to opportunity it, but astir apt a somewhat weaker labour market."