Economists predict that the Bank of Canada will maintain a measured approach towards interest-rate cuts after Statistics Canada reported a significant uptick in employment figures in January.

According to the federal agency’s latest Labour Force Survey, the Canadian economy added 37,000 jobs in January, a stark contrast from the previous months of stagnant employment rates. Commercial real estate investors are anxiously awaiting a drop in interest rates in order to bring capital off the sidelines in 2024.

StatCan’s January data also revealed a drop in Canada’s unemployment rate to 5.7%, marking the first decline since December 2022 and signalling a tightening of the labour market.

“I would classify the labour market as tighter than expected, but not necessarily stronger than expected,” Andrew Grantham, CIBC’s executive-director of economics told the Canadian Press. “That’s because, yes, employment continued to rise a little bit faster than the consensus expected. But it really paled in comparison with the big increase in population.”

Despite the positive employment figures, economists told CP that the BoC is unlikely to rush into interest rate cuts, emphasizing a cautious stance in light of the broader economic landscape.

BoC Governor Tiff Macklem has adopted a softer stance toward interest-rate increases. In its latest decision, the BoC held its key overnight rate at 5% and signalled that it is just a matter of time before cuts occur.

Pictured: Bank of Canada Governor Tiff Macklem