BOC December rate hike odds drop as unemployment rises

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Swap markets have adjusted the likelihood of a Bank of Canada (BOC) rate hike in December, as the probability has decreased from 40% to approximately 32%. This shift follows the release of employment data indicating a stagnant job market and a slight rise in unemployment. The market’s response suggests that participants see these economic indicators as reducing the chance of an imminent rate hike by the BOC. The central bank had previously raised its policy rate in October, marking the first increase since mid-2023.

Key Takeaways

• Swap market pricing suggests a decreased probability of a BOC rate hike in December, now at 32%.
• The adjustment follows employment data showing no significant job growth and a rise in unemployment to 6.7%.
• This market movement appears consistent with a scenario where the BOC might pause further rate hikes in the near term.

What to Watch

Observers will be keenly watching upcoming economic data releases, particularly those related to inflation and GDP, which could further influence market pricing of BOC rate moves. Any public statements from BOC Governor Tiff Macklem or Senior Deputy Governor Carolyn Rogers regarding monetary policy intentions will also be crucial. The BOC’s next interest rate announcement on December 9 will be a key indicator of the central bank’s policy direction in response to the evolving economic landscape.