Bank of Canada holds rates as growth strengthens but labour market softens
The BoC left its benchmark interest rate unchanged at 2.25% for an 11th consecutive month, with Governor Tiff Macklem noting that while the economy has regained momentum, risks remain elevated. The decision came as Statistics Canada reported the economy shed approximately 42,000 jobs in August, reversing part of the summer’s employment gains, though the unemployment rate held steady at 6.4% as slower labour force growth offset weaker hiring. Wage growth also cooled, with average hourly earnings rising 2.0% year over year, down from 2.8% in July. Policymakers pointed to rising oil prices and the potential effects of new U.S. tariffs and Canadian countermeasures as factors that could keep inflation pressures elevated.
Why this matters: The combination of resilient growth, sticky inflation, and a softening labour market reinforces the BoC’s wait-and-see approach. While policymakers signalled that rates could rise if inflation remains persistently above target, they appear content for now to monitor how energy prices, tariffs, and slowing employment growth shape the outlook in the months ahead.
U.S. labour market shows renewed strength in August as hiring beats expectations
U.S. employers added 162,000 jobs in August, exceeding many economists’ expectations and marking a notable improvement from the softer pace of hiring seen earlier in the summer, while the unemployment rate held steady at 4.1%. Payroll gains were led by food services and drinking places, local government education, and manufacturing, while the information sector continued a broader trend of weakness.
Why this matters: The report suggests labour market conditions remain resilient despite concerns that broader economic growth has been slowing in recent months, offering some reassurance to policymakers and markets alike as they assess the health of the U.S. consumer heading into the fall.
| Index† | Change (%) | Index Level | |||
|---|---|---|---|---|---|
| Week | MTD | YTD | 1 Yr | ||
| Treasury Bill | 0.04 | 0.03 | 1.52 | 2.35 | 194 |
| Canadian Bonds | -0.13 | -0.16 | 0.29 | 1.56 | 1,203 |
| Canadian Equities | -0.05 | 0.70 | 16.86 | 29.25 | 36,514 |
| U.S. Equities | 0.13 | 0.46 | 13.63 | 20.09 | 7,719 |
| International Equities | -0.14 | 0.26 | 14.63 | 23.60 | 3,239 |
| Emerging Market Equities | 0.26 | 0.43 | 24.86 | 39.87 | 1,726 |
| European Equities | -0.79 | -0.13 | 12.81 | 21.75 | 217 |
| Currencies† | Change (%) | Exchange rate | |||
|---|---|---|---|---|---|
| Week | MTD | YTD | 1 Yr | ||
| C$/US | 0.49 | 0.12 | -0.81 | -0.14 | 0.72 |
| C$/Euro | 0.21 | 0.14 | 0.29 | 0.16 | 0.62 |
| C$/Pound | 0.62 | 0.38 | -1.13 | -0.74 | 0.53 |
| Commodities (US$)† | Change (%) | Price | |||
|---|---|---|---|---|---|
| Week | MTD | YTD | 1 Yr | ||
| WTI Crude Oil ($/Barrel) | 9.69 | 6.67 | 60.63 | 47.76 | 91 |
| Gold ($/oz) | -1.18 | -0.11 | -0.46 | 19.21 | 4,477 |
Treasury Bill is represented by the FTSE Canada 60 Day T-Bill Index (C$), Canadian Bonds represented by the FTSE Canada Universe Bond Index (C$), Canadian Equities represented by the S&P/TSX Composite TR Index (C$), U.S. Equities represented by the S&P 500 TR Index (US$), International Equities represented by the MSCI EAFE GR Index (US$), Emerging Market Equities represented by the MSCI EM GR Index (US$), European Equities represented by the MSCI Europe Index (€). It is not possible to invest directly in an index. Assumes reinvestment of all income and no transaction costs or taxes.
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