If Canada Skips The Rate Hike It’s Due To Ukraine, Not The Economy: National Bank

Canada’s economy has been making a solid recovery, and it turns out it’s even stronger than thought. National Bank of Canada (NBF) points to this morning’s employment revision. A routine revision from Statistics Canada (Stat Can) shows a sharp climb for employment. In the bank’s opinion, this further strengthens the reason for the Bank of Canada (BoC) to raise rates. The only reason not to increase rates is if they see geopolitical tensions turning into economic disruptions.

Canadian Job Numbers Received A Large Upward Revision

Canada’s national statistics agency made a routine data adjustment, showing a stronger economy. Stat Can revised employment data to show 234,000 new jobs over the past two months. The revision shows an additional 26,000 jobs in December, which now comes in at 78,600 employed people. The case for Canada to raise rates was strong before. This revision shows the economy is recovering even faster than thought.

Canada: Revised Data Shows Stronger Job Creation At The End of 2021

The two-month change in the number of Canadian jobs. Numbers are shown for both the previous and current seasonal adjustments.

Source: National Bank of Canada; Statistics Canada.

Canadian Job Data Revisions Due To Routine Model Changes

The reason for the revision is the annual changes of the seasonal adjustment model. It’s a routine procedure that occurs after a seasonal change. This one impacts only data from 2019 to 2021, according to the agency.

“While this practice does not change the level of unemployment over a full year, it can change the distribution of momentum in a given year,” wrote Stefane Marion, chief economist at NBF.

In a research note to the bank’s financial markets clients, he reiterates the economy is ready for higher rates. Every economic indicator Canada has produced shows the economy needs higher interest rates.

“If the BoC chooses to keep its policy rate unchanged this week, it will be because of geopolitical concerns (Ukraine), not because of a lack of strength in Canadian economic data,” ends the economist.



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  • Omar 2 years ago

    Any excuse to not raise rates are going to be considered. It would have been the food shortage if it wasn’t the Ukraine.

    This government has no idea how to spend within its means, because it only wins by promising a small portion of the population more debt-funded handouts.

    • Rick 2 years ago

      Because of Ukraine

      • Doomcouver 2 years ago

        The BoC will make any excuse to delay the inevitable asset deflation death-spiral.

  • Scott 2 years ago

    Too bad he already used his “get re-elected for free” card… I thought climate change was helping keep the rates low…

  • mara 2 years ago

    All developed countries have the same issue: high inflation, low mortgage rates.
    Here is one of my readings. Source: Le Figaro France
    Interest rates in France these days: 20 years mortgage and 15 years mortgage. Range: 0,6 % to 1, 04%.

    On peut aujourd’hui s’endetter sur 20 ans, en France, entre 0,7% et 1,04% selon la qualité du dossier présenté à la banque. Sur 15 ans, il est même possible d’obtenir un taux compris entre 0,6 % et 0,91%.

  • Ike 2 years ago

    Great move to reduce the buying power of house-seekers in an already unaffordable market

  • Kate 2 years ago

    No hikes, just inflation and it have been confirm today by BoC by not changing the rate.

  • Gen Z 2 years ago

    Hike interest rates already. COVID should have reset the economy long ago.
    It makes no sense that Canada has so much land, yet young people are living like cage dwellers in Hong Kong while paying Manhattan prices.
    Then you have the widowed living in an entire home and refusing to downsize just to get more cash to retire in Thailand or SEA and cause push inflation to the locals there.

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