Month: October 2025

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29 Oct

Bank of Canada lowers policy rate to 2¼%

General

Posted by: Dean Kimoto

This article is reposted from the Bank of Canada website

October 29, 2025

The Bank of Canada today reduced its target for the overnight rate by 25 basis points to 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%.

With the effects of US trade actions on economic growth and inflation somewhat clearer, the Bank has returned to its usual practice of providing a projection for the global and Canadian economies in this Monetary Policy Report (MPR). Because US trade policy remains unpredictable and uncertainty is still higher than normal, this projection is subject to a wider-than-usual range of risks.

While the global economy has been resilient to the historic rise in US tariffs, the impact is becoming more evident. Trade relationships are being reconfigured and ongoing trade tensions are dampening investment in many countries. In the MPR projection, the global economy slows from about 3¼% in 2025 to about 3% in 2026 and 2027.

In the United States, economic activity has been strong, supported by the boom in AI investment. At the same time, employment growth has slowed and tariffs have started to push up consumer prices. Growth in the euro area is decelerating due to weaker exports and slowing domestic demand. In China, lower exports to the United States have been offset by higher exports to other countries, but business investment has weakened. Global financial conditions have eased further since July and oil prices have been fairly stable. The Canadian dollar has depreciated slightly against the US dollar.

Canada’s economy contracted by 1.6% in the second quarter, reflecting a drop in exports and weak business investment amid heightened uncertainty. Meanwhile, household spending grew at a healthy pace. US trade actions and related uncertainty are having severe effects on targeted sectors including autos, steel, aluminum, and lumber. As a result, GDP growth is expected to be weak in the second half of the year. Growth will get some support from rising consumer and government spending and residential investment, and then pick up gradually as exports and business investment begin to recover.

Canada’s labour market remains soft. Employment gains in September followed two months of sizeable losses. Job losses continue to build in trade-sensitive sectors and hiring has been weak across the economy. The unemployment rate remained at 7.1% in September and wage growth has slowed. Slower population growth means fewer new jobs are needed to keep the employment rate steady.

The Bank projects GDP will grow by 1.2% in 2025, 1.1% in 2026 and 1.6% in 2027. On a quarterly basis, growth strengthens in 2026 after a weak second half of this year. Excess capacity in the economy is expected to persist and be taken up gradually.

CPI inflation was 2.4% in September, slightly higher than the Bank had anticipated. Inflation excluding taxes was 2.9%. The Bank’s preferred measures of core inflation have been sticky around 3%. Expanding the range of indicators to include alternative measures of core inflation and the distribution of price changes among CPI components suggests underlying inflation remains around 2½%. The Bank expects inflationary pressures to ease in the months ahead and CPI inflation to remain near 2% over the projection horizon.

With ongoing weakness in the economy and inflation expected to remain close to the 2% target, Governing Council decided to cut the policy rate by 25 basis points. If inflation and economic activity evolve broadly in line with the October projection, Governing Council sees the current policy rate at about the right level to keep inflation close to 2% while helping the economy through this period of structural adjustment. If the outlook changes, we are prepared to respond. Governing Council will be assessing incoming data carefully relative to the Bank’s forecast.

The Canadian economy faces a difficult transition. The structural damage caused by the trade conflict reduces the capacity of the economy and adds costs. This limits the role that monetary policy can play to boost demand while maintaining low inflation. The Bank is focused on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval.

Information note
The next scheduled date for announcing the overnight rate target is December 10, 2025. The Bank’s next MPR will be released on January 28, 2026.

17 Oct

Employment Rose in September Following Declines in Prior Two Months. Canadian Employment Rises More Than Expected, But Not Enough To Fully Offset Prior Two-Month Job Loss

General

Posted by: Dean Kimoto

Today’s Labour Force Survey for September was stronger than expected, with a net employment gain of 60,400, but the unemployment rate was steady at 7.1% as more people entered the workforce. The employment gain was driven by full-time work. The manufacturing sector–hard hit by US tariffs–added 27,800 employees, and agriculture, health care and other services all added workers. The employment rate — the proportion of the working-age population that’s employed — rose 0.1 percentage points to 60.6% in September.

Average hourly wages among employees increased 3.3% (+$1.17 to $36.78) on a year-over-year basis in September, following growth of 3.2% in August (not seasonally adjusted).

The surprisingly strong job gains suggest Canada’s job market is showing some resilience to tariff disputes with the US. The jump in factory employment, although not driven by autos, suggests the sector may benefit from some exporters’ exemption from levies under the Canada-US-Mexico trade Agreement.

The loonie surged in response to the news as shorter-term interest rates rose. The report reduces expectations for a rate cut when the Bank of Canada meets again on October 29, with traders putting the odds at about 25%, down from 70% before the data release. However, the better-than-expected job gains did not fully offset the losses posted in July and August, as Canada shed a net 45,900 jobs over the third quarter, the weakest quarter since the pandemic.

Total hours worked fell 0.2% last month, and the labour force rose by 72,300.

Even with the latest jobs report, the Canadian economy remains vulnerable to the unsettling US attitude towards the free trade agreement, which is slated to be renegotiated by July 2026. The Bank of Canada cut the overnight policy rate to 2.5% in September, and additional rate cuts are likely this year. The Bank has only two more decision dates in 2025: October 29 and December 10. September inflation data will be released on October 21, the day after the BoC publication of the Business and Consumer Outlook Survey.

The overall unemployment rate was unchanged at 7.1% in September, following a 0.2 percentage point increase in August. Since the start of 2025, the unemployment rate has increased by 0.5 percentage points. The trend has generally been upward since the beginning of the year, with an increase of 0.6 percentage points compared to January. Youth unemployment rates remain elevated, with the jobless rate among students at a whopping 17.1%, and at 11.9% for youth not attending school.

Employment in manufacturing rose in September (+28,000; +1.5%), the first increase since January. The gain was concentrated in Ontario (+12,000) and Alberta (+7,900). Before the rise in September, employment in manufacturing had recorded a net decline of 58,000 (-3.1%) from January to August.

Employment change by industry, September 2025

In Quebec, employment was little changed for a third consecutive month in September. The unemployment rate in Quebec in September (5.7%) was down from the recent peak of 6.3% recorded in June, and little changed on a year-over-year basis. However, Quebec will undoubtedly see job losses in the aluminum and lumber industries unless US tariffs are reduced sharply.

Employment was also little changed in Ontario in September. The unemployment rate in the province increased by 0.2 percentage points to 7.9% in September, as more people searched for work. The unemployment rate in the province was up 0.8 percentage points from September 2024. In the CMA of Toronto, the unemployment rate was unchanged at 8.9% in September 2025 and was up 0.8 percentage points on a year-over-year basis (three-month moving averages).

Bottom Line

The Bank of Canada has made it clear that it will focus on inflation as well as on increasing slack in the economy, and a September cut may still hinge on the consumer price index released next week. Labour markets are still softer than they were a year ago. The unemployment rate held steady at 7.1% in September, but it remains up half a percent from a year ago. International trade data softened in August, and U.S. tariffs remain a significant threat to the economic outlook.

It is doubtful that Bank of Canada policymakers thought in September that just one cut in the overnight rate would be enough to address economic weakness, and the labour force data today probably isn’t positive enough alone to derail another cut in October. Still, the Bank of Canada will also have to take into account the next round of inflation data – and future cuts beyond October would be less likely if government deficit spending ramps up as expected to help address tariff-related economic weakness.

The central bank is well aware that the Labour Force Survey is notoriously volatile, and the jobless rate at 7.1% is still up half a percentage point from a year ago. The underlying details of the report were not as positive. Actual hours worked declined despite the surge in full-time employment. And permanent layoffs ticked higher. But other sectors have remained broadly resilient. Services employment was up 18k month-over-month and 225k year-over-year last month. All eyes will be on the CPI data next Tuesday.

Please Note: The source of this article is from SherryCooper.com/category/articles/

16 Oct

BMO CEO White urges Canada to cut taxes even if deficit widens

Latest News

Posted by: Dean Kimoto

Canada is “absolutely not” competitive on tax policy, said Bank of Montreal Chief Executive Officer Darryl White, who called on the federal government to cut taxes even if it means running a larger deficit.

Darryl White, chief executive officer of BMO Financial Group, speaks during the US-Canada Summit in Toronto, Ontario, Canada, on Tuesday, April 4, 2023. The event will focus on politics, trade, tech innovation, security, energy, and the environment.

By Christine Dobby

(Bloomberg) — Canada is “absolutely not” competitive on tax policy, said Bank of Montreal Chief Executive Officer Darryl White, who called on the federal government to cut taxes even if it means running a larger deficit.

With trade issues dominating the national debate, tax incentives for investment aren’t getting enough attention, White said Wednesday at the Toronto Global Forum.

Prime Minister Mark Carney’s government cancelled an unpopular increase to the capital-gains inclusion rate, but it needs to go further, White said, such as by letting businesses write off capital assets sooner and lowering corporate and personal taxes.

“We have a little bit of fiscal capacity to play with here,” he said. While he’s normally a supporter of balanced budgets, “this is a moment where — throw that out the window and take a little bit more risk.”

He said Canada should seize the momentum created by U.S. President Donald Trump’s trade policies, which have prompted a rethink of internal barriers to trade and Canadian exporters’ dependence on the U.S. market.

“Are we letting a crisis go to waste? Are we competitive on tax? I know the answer to that is, ‘Absolutely not,’” he said.

In July, the federal government cut the country’s lowest income tax rate by one percentage point.

White, who’s led the country’s third-largest bank by market capitalization for almost eight years, said capital will “flow to the point of least resistance” — and Canada must make itself a destination. Other top executives, including other bank CEOs, have also pressed Ottawa for tax reform.

Carney’s government is set to unveil its first budget on Nov. 4, with the federal deficit expected to climb to at least $70 billion. National Bank of Canada Chief Economist Stefane Marion predicts a shortfall of about $100 billion, saying Ottawa will likely deliver a “stimulative budget.”

“We do have some fiscal room when you compare Canada to the rest to the world,” Marion said at a Bloomberg event last week. “We should not waste it.”

©2025 Bloomberg L.P.

3 Oct

Vancouver-area home sales up 1.2% in September, still below long-term trend

General

Posted by: Dean Kimoto

Written by The Canadian Press Regional October 2, 2025

Vancouver-area home sales inched up in September from last year, but prices are still under pressure as sales stand well below long-term trends while listings rise, said Greater Vancouver Realtors.

Vancouver-area home sales inched up in September from last year, but prices are still under pressure as sales stand well below long-term trends while listings rise, said Greater Vancouver Realtors.

Sales totalled 1,875 in the month, a 1.2% increase from last year but 20.1% below the 10-year seasonal average, the board said Thursday.

There were 6,527 new home listings in September, a 6.2% increase from last year, leaving total listings up 14.4% from a year earlier at 17,079 homes. The total number of homes for sale was 36.1% above the 10-year seasonal average.

The rise in listings and tepid sales helped lead to a 3.2% decline in the composite benchmark price of a home from last year, and 0.7% lower from August, to $1,142,100.

While the market is under pressure, the association said last month’s interest rate cut from the Bank of Canada, with another expected before the end of the year, could help give some lift to the fall market.

“Easing prices, near-record high inventory levels, and increasingly favourable borrowing costs are offering those looking to purchase a home this fall with plenty of opportunity,” said Andrew Lis, the association’s director of economics and data, in a statement.

Detached home sales were up seven per cent in the month from last year as the benchmark price declined 4.4 per cent to $1,933,100. Apartment home sales rose 1.5% as the category’s benchmark price also dropped 4.4%, to $728,800. Attached home sales were down 5.8%.

While the market has been under pressure in recent years from interest rates, policy shifts and trade tensions, there is the potential for improvement in the months ahead, said Lis.

“With the acute impacts of these events now fading, we expect market activity to continue stabilizing to end the year, barring any unforeseeable major disruptions.”