Earlier this morning, the Bank of Canada released its target for interest rates, keeping it the same at 1.75%. As this is the target, the actual rates are a quarter point on either side – the Bank Rate is 2 per cent and the deposit rate is 1 ½ per cent.[1] There are two main drivers that frankly, are on everyone’s mind. Global trade is showing signs of stress, weighing more heavily on demand. We think that the G20 meetings had a positive influence on this, so all eyes will be on the ‘Tariff Man‘ and Chinese President Xi Jinping as they dance around the prospect of additional tariffs. [2] Business investment has fallen, largely due to this trade uncertainty, but (outside of the oil industry) this is expected to strengthen with the signing of the USMCA.The other area weighing on the BoC’s decision is of course then, oil, as the price for Canadian heavy and light product has fallen even further. The Bank reports that “activity in Canada’s energy sector will likely be materially weaker than expected.”[1]
Overall, it seems like another rate increase in the near future is likely, if some of the major economic obstacles begin to come down.
From our perspective in the executive search and recruitment world, we have seen a strong economy and a candidates’ market that likely won’t change for some time. In the past few months I have seen a number of candidates get multiple offers in their job search. I have also had a number of requests this past year for searches with companies that are adding new positions to their accounting team rather than the typical search where a company is replacing a person leaving. Both for me reflect how strong our market is currently.
For now, we can expect the same competitiveness from Canadian firms, regardless of how capital intensive their operations are. Service industries and other non-capital intensive will be less negatively impacted by a potential hike, so there we’re unlikely to see a change in hiring in either scenario.
