The Bank of Canada’s next decision on interest rates is scheduled for April 12. Money markets are now placing odds of about 8% that the bank will hike rates by a quarter-point at that meeting. That’s down from an 18% probability prior to the 830 am ET data. The bank held rates steady at its policy announcement on Wednesday, and suggested any further moves would be data dependent.
With the Canadian jobs report only modestly stronger than expected, markets took their cue more from the U.S. jobs report released at the same time, which overall contained hints of an easing in inflationary pressures. The non-farm payrolls report showed the U.S. economy adding jobs in February at a higher clip than the Street expected, but average hourly earnings only rose 0.2% last month after gaining 0.3% in January, while the unemployment rate rose to 3.6%.
Traders are now pricing in a 28% chance of a 50-basis-point hike from the Fed this month, compared with a 50% chance before the numbers were released.Matthieu Arseneau and Alexandra Ducharme of National Bank Financial Not only were the jobs created above the economists’ consensus, but the evolution of hourly wages also surprised the economists upwards in February. However, there is no need to be too alarmed as signs of moderation are pointing. While the jobless rate is comparable to its last summer through, the labour market is not as red-hot as it was back then. Historically, consumers have been clairvoyant in perceiving reversals in the labor market.
BoC needs to keep raising rates. Cheap capital is a terrible drug.