{"id":60367,"date":"2025-06-02T12:00:37","date_gmt":"2025-06-02T12:00:37","guid":{"rendered":"https:\/\/www.pantheregroup.com\/2025\/06\/02\/posthaste-markets-expect-a-bank-of-canada-pause-but-these-economists-have-other-ideas\/"},"modified":"2025-06-02T12:00:37","modified_gmt":"2025-06-02T12:00:37","slug":"posthaste-markets-expect-a-bank-of-canada-pause-but-these-economists-have-other-ideas","status":"publish","type":"post","link":"https:\/\/www.pantheregroup.com\/2025\/06\/02\/posthaste-markets-expect-a-bank-of-canada-pause-but-these-economists-have-other-ideas\/","title":{"rendered":"Posthaste: Markets expect a Bank of Canada pause, but these economists have other ideas"},"content":{"rendered":"<p> \n<br \/><img decoding=\"async\" alt=\"The Bank of Canada faces a difficult decision on interest rates this Wednesday. \n\" data-has-syndication-rights=\"1\" data-license-id=\"3860391\" data-portal-copyright=\"Sean Kilpatrick\/THE CANADIAN PRESS\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/05\/bank-of-canada-0602-ph.jpg\" title=\"The Bank of Canada faces a difficult decision on interest rates this Wednesday. \n\" \/><br \/>\n<iframe loading=\"lazy\" title=\"Bank of Canada could cut three more times: Desjardins\" width=\"1080\" height=\"608\" src=\"https:\/\/www.youtube.com\/embed\/2cexjouu8vQ?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><br \/>\n<\/iframe><br \/>\n<\/p>\n<p> <span>The Bank of Canada paused interest rate cuts in April to get a better of idea of where Donald Trump\u2019s tariffs and the economy were headed.<\/span> <\/p>\n<p> <span>A month and a bit on and it\u2019s questionable whether that outlook is any clearer.\u00a0<\/span> <\/p>\n<p> <span>Last week the U.S. Court of International Trade ruled against the tariffs Trump invoked under International Economic Emergency Powers Act, though that decision has been put on hold by an appeals court.\u00a0<\/span> <\/p>\n<p> <span>Then on Friday Trump said he would double tariffs on steel and aluminum, of which Canada is a major supplier, to 50 per cent to help protect American workers.\u00a0<\/span> <\/p>\n<p> <span>Plenty is unclear then on the trade front, but signals from the economy have been almost as murky.\u00a0<\/span> <\/p>\n<p> <span>One of the key arguments for a pause when the Bank of Canada decides on rates this Wednesday is that core inflation data last month came in hotter than expected.\u00a0<\/span> <\/p>\n<p> <span>However, that acceleration was more benign than it looked, said Jimmy Jean, chief economist for Desjardins Group, coming from a small set of components, such as rents and airfare, that are typically volatile.\u00a0<\/span> <\/p>\n<p> <span>Goods affected by retaliatory tariffs from Canada also helped hike prices, but there is reason for \u201ccautious optimism\u201d on this front, he said. So far Ottawa has put tariffs on about $60 billion worth of U.S. goods, though a portion of these have been put on pause.\u00a0<\/span> <\/p>\n<p> <span>\u201cWhile future trade policy decisions affecting Canada remain hard to predict, the tone between Ottawa and Washington has grown more conciliatory in recent weeks,\u201d said Jean. \u201cThe legal obstacles that Trump\u2019s trade policy encountered this week could perhaps also help pave the way for a deal.\u201d<\/span> <\/p>\n<p> <span>It\u2019s therefore looking less likely that Canada will go ahead with tariffs on the full $185 billion list of goods, he said. Moreover, a stronger Canadian dollar, lower oil prices and the scrapping of the carbon tax will help ease price pressures.\u00a0<\/span> <\/p>\n<p> <span>The labour market is probably a better guide to where the economy is going and here things are not looking so good, said Stephen Brown, deputy chief North America economist for Capital Economics.<\/span> <\/p>\n<p> <span>April narrowly avoided another decline in employment, only because of jobs related to the federal election. The private sector lost 78,000 positions in three months and is expected to lose more.\u00a0<\/span> <\/p>\n<p> <span>David Rosenberg, president of Rosenberg Research &#038; Associates Inc, said in a recent column that with the unemployed swelling 14 per cent over the past year weak, labour data show the need for more rate relief in Canada.<\/span> <\/p>\n<p> <span>\u201cThere can really be little doubt that the Canadian economy has entered a recession, and the Bank of Canada would be well advised to move out of the dugout and onto the baseball field,\u201d he said.\u00a0<\/span> <\/p>\n<p> <span>Yet the markets are only putting a 20 per cent chance on another cut this Wednesday.<\/span> <\/p>\n<p> <span>Economists with Royal Bank of Canada, who predict a hold, said the data hasn\u2019t been all bad since the central bank\u2019s last decision.\u00a0<\/span> <\/p>\n<p> <span>RBC\u2019s own cardholder tracking shows consumer spending held up better than expected in March and April and job postings on Indeed.com signal that hiring demand may be stabilizing.<\/span> <\/p>\n<p> <span>The Bank of Canada has cut more than other central bank in a developed nation and if the economy weakens it still has room to reduce the rate further, said RBC economists Nathan Janzen and Abbey Xu. \u00a0But it also must consider the impact of government support, which is a more effective tool to provide targeted aid for sectors hit by the tariff war.\u00a0<\/span> <\/p>\n<hr \/>\n<p> <em><strong>\u00a0Sign up here to get Posthaste delivered straight to your inbox.<\/strong><\/em> <\/p>\n<hr \/>\n<p> <strong><br \/> <img loading=\"lazy\" decoding=\"async\" alt=\"\" class=\"aligncenter size-full wp-image-1758646\" height=\"114\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2019\/02\/subhead_leading.png\" width=\"838\" \/><\/strong> <\/p>\n<p><img decoding=\"async\" alt=\" National Bank of Canada\" data-has-syndication-rights=\"1\" data-license-id=\"3860352\" data-portal-copyright=\"\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/05\/jobs-0602-ph.jpg\" title=\" National Bank of Canada\"><\/p>\n<p> Job loss in the private sector is now at levels that in the past have only been seen in recessions, says <\/p>\n<p>                National Bank of Canada.<\/p>\n<p>                 Data from the Survey of Employment, Payrolls and Hours showed that employment fell for the third month in a row in March, racking up a cumulative net loss of 78,000 jobs. <\/p>\n<p> Both that indicator and Statistic Canada\u2019s Labour Force Survey show that 71 per cent of private sectors have contracted over the past three months, said National economists. <\/p>\n<hr \/>\n<p> <img loading=\"lazy\" decoding=\"async\" alt=\"\" class=\"aligncenter size-full wp-image-1758643\" height=\"114\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2019\/02\/subhead_breaking.png\" width=\"838\" \/> <\/p>\n<ul>\n<li>Local real estate boards will release the latest data on home sales and prices in their regions for May this week, starting with Calgary today, Vancouver on Tuesday and Toronto on Wednesday.<\/li>\n<li><strong>Today\u2019s Data:<\/strong> United States ISM manufacturing, construction spending<\/li>\n<li><strong>Earnings:<\/strong> The Campbell\u2019s Company<\/li>\n<\/ul>\n<hr \/>\n<p> <strong><br \/> <img loading=\"lazy\" decoding=\"async\" alt=\"\" class=\"aligncenter size-full wp-image-3080180\" height=\"114\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/07\/subhead_marketsam.jpeg\" width=\"838\" \/><\/strong> <\/p>\n<p><img decoding=\"async\" alt=\" Financial Post\" data-has-syndication-rights=\"1\" data-license-id=\"3860398\" data-portal-copyright=\"\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2025\/05\/chart-0602-ph.jpg\" title=\" Financial Post\"><\/p>\n<figure class=\"embedded-image\"><\/figure>\n<hr \/>\n<p> <strong><img loading=\"lazy\" decoding=\"async\" alt=\"\" class=\"aligncenter size-full wp-image-3080181\" height=\"114\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2022\/07\/subhead_reads.jpeg\" width=\"838\" \/><\/strong> <\/p>\n<ul>\n<li>Forget the trade war, the fish are biting in Canada<\/li>\n<li>Should Moira manage her $400,000 RRSP investments on her own?<\/li>\n<li>Think the issue of workplace vaccine mandates is long-settled? Not quite, say courts<\/li>\n<\/ul>\n<p> <img loading=\"lazy\" decoding=\"async\" alt=\"\" class=\"aligncenter size-full wp-image-2059284\" height=\"114\" src=\"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2020\/04\/subhead_personal_finance_2.png\" width=\"838\" \/> <\/p>\n<p> Moira, now 55, plans to retire at 60. She has $500,000 in RRSPs, two-thirds of it in a fully managed account with a major brokerage. For an average of six per cent returns in the past seven years, she is paying 1.94 per cent, which is more than $600 a month. <\/p>\n<p> She manages $100,000 of that on her own and wonders if she should get a self-managed account and put it all in a balanced fund with low fees, or exchange-traded funds (ETFs). <\/p>\n<p>                Find out what FP Answers recommends. <\/p>\n<hr \/>\n<div class=\"x_elementToProof\"><span>Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you starting out or making a change and wondering how to build wealth? Are you trying to make ends meet? Drop us a line at\u00a0<\/span>wealth@postmedia.com<span><\/span><span>\u00a0with your contact info and the gist of your problem and we\u2019ll find some experts to help you out while writing a Family Finance story about it (we\u2019ll keep your name out of it, of course).<\/span><\/div>\n<hr \/>\n<h2>McLister on mortgages<\/h2>\n<p> Want to learn more about mortgages? Mortgage strategist Robert McLister\u2019s <\/p>\n<p>                Financial Post column <\/p>\n<p>                can help navigate the complex sector, from the latest trends to financing opportunities you won\u2019t want to miss. Plus check his <\/p>\n<p>                mortgage rate page<\/p>\n<p>                 for Canada\u2019s lowest national mortgage rates, updated daily. <\/p>\n<hr \/>\n<h2>Financial Post on YouTube<\/h2>\n<p> Visit the Financial Post\u2019s <\/p>\n<p>                YouTube channel<\/p>\n<p>                 for interviews with Canada\u2019s leading experts in business, economics, housing, the energy sector and more. <\/p>\n<hr \/>\n<p> <em>Today\u2019s Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.<\/em> <\/p>\n<p> Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at\u00a0<\/p>\n<p>                posthaste@postmedia.com<\/p>\n<p>                . <\/p>\n<hr \/>\n<ul class=\"related_links\">\n<li>What the tariff ruling that shook the world means to Canada<\/li>\n<li>&#8216;The fear is real,&#8217; says TD, predicting 100,000 jobs will be lost in looming recession<\/li>\n<\/ul>\n<p> <em><strong>Bookmark our website and support our journalism:<\/strong> Don\u2019t miss the business news you need to know \u2014 add\u00a0financialpost.com\u00a0to your bookmarks and sign up for our newsletters here<\/em> <\/p>\n<p><\/img><\/img><br \/>\n<br \/>\n<br \/>Posthaste: Markets expect a Bank of Canada pause, but these economists have other ideas<\/a><br \/>\n<br \/>2025-06-02 12:00:37<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Bank of Canada paused interest rate cuts in April to get a better of idea of where Donald Trump\u2019s tariffs and the economy were headed. A month and a&#8230;<\/p>\n","protected":false},"author":2,"featured_media":60368,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[31],"tags":[],"class_list":["post-60367","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy"],"_links":{"self":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/60367","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/comments?post=60367"}],"version-history":[{"count":0,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/60367\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media\/60368"}],"wp:attachment":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media?parent=60367"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/categories?post=60367"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/tags?post=60367"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}