1/12/2026
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Posted in Canadian Economy and Interest Rates by Vanguard Realty | Back to Main Blog Page
Canada’s latest jobs report appears to give the Bank of Canada more reason to wait rather than rush into rate hikes – and for mortgage borrowers, that likely means a longer stretch of stability on variable and HELOC costs rather than an abrupt turn higher.
Statistics Canada reported that the economy added just 8,200 jobs in December, even as the unemployment rate climbed to 6.8% from 6.5% the previous month.
Full-time employment rose by 50,200 positions while part-time work fell by 42,000, capping three months that have seen a combined 181,000 jobs added from September through November.
BMO chief economist Doug Porter said the latest figures brought the labour market back down to earth after a run of surprisingly strong gains.
“Following massive swings in the prior six months (mostly on the strong side of the ledger), today’s ho-hum report likely has a better grasp on reality,” Porter said.
He added that the moderate data “wouldn’t be of much interest to the Bank of Canada” when it weighs its next decision and backed a view that policymakers would hold the policy rate.
TD Bank senior economist Andrew Hencic struck a similar note, saying Friday’s report is “unlikely to move the needle for the Bank of Canada.” He argued that ongoing uncertainty and lingering inflation risks should keep the central bank from easing further and would reinforce its cautious stance on any future move.
Employment gains in December leaned on health care and social assistance, which added about 21,000 positions, and on a 4,300-job increase in manufacturing.
Unemployment for 15–24-year-olds rose to 13.3%, even though that remains below the 14.7% high reached in September. Average hourly wages grew 3.4% year-over-year, slowing from 3.6% in November.
BoC already signalled patience on rates
The December data follows a Bank of Canada decision on December 10 to hold its overnight rate at 2.25%, with officials noting that employment has posted solid gains and the jobless rate has fallen to 6.5% in November.
Porter earlier said the central bank still appears more likely to cut than to hike this year, even if keeping rates unchanged remains its base case.
Bank of Canada governor Tiff Macklem also said that the central bank’s benchmark rate at 2.25% is “at about the right level” to support a period of modest growth while keeping inflation near target. He stressed that the Bank continues to judge underlying inflation “to be in the 2.5% range” and expects headline price growth to remain close to 2% over the next two years.
Jobs and tariffs kept front and centre
A resilient labour market and tariff uncertainty already pushed the Bank to stay on hold in mid‑year decisions, even when markets briefly priced in cuts.
More recently, the Bank’s December hold at 2.25% was widely anticipated after strong November hiring, with economists warning that a surprise hike in 2026 remains a distant but real possibility.
For mortgage professionals, the central bank’s first decision of the new year later this month would likely preserve the status quo following the December’s jobs report.
A modest gain in employment, alongside rising unemployment and cooling wage growth, means an economy is still absorbing past shocks rather than overheating. That mix reduces the odds of an early tightening move, but it also leaves borrowers facing a longer wait before any fresh relief on variable rates.
Source: Canadian Mortgage Professional
Bank of Canada, Bank of Canada Benchmark Rate, Economic Growth, Interest Rate Forecast, Interest Rates
