Statistics Canada is set to unveil the Canadian Labor Force Survey report at 13:30 GMT on Friday, with market observers anticipating a report that could affirm the recent decision by the Bank of Canada (BoC) to maintain its current interest rates.
After keeping interest rates steady at 5.00% in January, the BoC signaled that it’s premature to consider rate cuts, emphasizing the need for further progress in key economic indicators before contemplating any shifts. The central bank has maintained the key interest rate at 5.0% since its September policy meeting.
Governor Tiff Macklem, speaking on Tuesday, reiterated that the policy interest rate at 5% is deemed necessary to address lingering inflationary pressures. The discussion around future policy, according to Macklem, is shifting from questioning the restrictiveness of monetary policy to determining how long the current stance should be maintained.
In December 2023, the Consumer Price Index (CPI) recorded a 3.4% annual increase in inflation figures, reaching levels last observed in May of the same year.
December’s labor market data from Statistics Canada showed a modest gain of 0.1K jobs, extending the streak of job creation for the sixth consecutive month since the drop recorded in July (-6.4K).
Key economic indicators also revealed that Canadian Gross Domestic Product (GDP) unexpectedly contracted by an annualized rate of 0.3% in the October-November period. This came after a 0.3% expansion in the previous quarter and a 0.6% gain in Q1 2023. The upcoming labor market report will be closely watched for its potential impact on the broader economic outlook and future monetary policy considerations.
