Weak Canadian Jobs Market Unlikely to Shift Bank of Canada From Its Inflation Focus
Canada has lost jobs for a third straight month, but Desjardins' Royce Mendes says this should not sway the Bank of Canada's December rate decision.
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what happened
Royce Mendes, head of macro strategy at Desjardins Group, says slack is building in Canada's labor market after a third consecutive month of job losses. October saw a decline of 4,700 jobs, on top of a 110,000 drop over the previous two months. The unemployment rate rose to 6.7% from 6.5%, which Mendes attributes to a larger population and more people searching for work.
He says the Bank of Canada appears focused on cost pressures that policymakers expect firms to pass on. Mendes also says the 30% market-implied probability of a December rate hike "looks too low." The information comes from Market Talk.
why it matters
For markets, the signal is that the central bank may look past weak employment to address inflation risks. That supports expectations for tighter policy and could weigh on the Canadian dollar and Canadian government bond yields.
market impact
Canadian dollar and bonds: higher BoC hike expectations support CAD
- Canadian dollar pressure up — rising expectations of a Bank of Canada rate hike in December
tags
instruments
sources
- Labor-Market Weakness Won't Interfere with Bank of Canada's CPI Focus — Market Talk, 6 November 2026 at 14:18 UTC
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