Bank of Canada Rate Hike Expected Despite Rising Unemployment
Despite an increase in unemployment and a slowdown in wage growth, the Bank of Canada is expected to raise interest rates next week. This Bank of Canada rate hike decision comes after the Canadian economy added 60,000 jobs in June.
Primarily in full-time work. However, with more Canadians seeking employment and the population continuing to grow. The unemployment rate has risen to 5.4%, the highest in over a year.
The Bank of Canada rate hike is a response to a variety of economic factors. The bank is concerned about high inflation and believes that the hot labour market is contributing to this.
They are particularly worried about the pace of wage growth and whether it could sustain inflation over the long term. Despite the slowdown in wage growth last month, workers’ wages are still rising faster than inflation.
Bank of Canada Rate Hike: Reactions from Key Players
The announcement of the Bank of Canada rate hike has elicited reactions from key players in the financial sector. RMT general secretary Mick Lynch has stated that the week of action will shut down the London Underground, highlighting the importance of their members’ work.
On the other hand, Glynn Barton, TfL’s chief operating officer, expressed disappointment at the planned action. He urged union members to reconsider their decision and engage in talks.
The Bank of Canada rate hike comes at a time when the Canadian labour market is showing signs of softening.
Despite this, the bank ended its pause on rate hikes in June after a string of economic data suggested its aggressive interest rate hikes weren’t cooling the economy fast enough. The quarter percentage point rate hike brought its key rate to 4.75 per cent, the highest it’s been since 2001.
The Bank of Canada rate hike is expected to have significant implications for the Canadian economy. While the bank has kept a close eye on the labour market for signs of overheating, it has said little about its future plans.
However, it has signaled that the following decision would be taken based on incoming economic data. The outcome of this rate hike could set a precedent for future decisions and actions in the financial sector.