Strong job creation in the large metropolitan areas and rising labour income should keep the Bank of Canada in tightening mode. At this juncture, the market puts the odds of a rate hike in October at 30% (up from 19% before the employment report) vs. 68% for the December meeting. We still think that a December hike is the most likely scenario but do not rule out a move in October if the Bank of Canada’s Business Outlook Survey (BOS) to be publish next week comes out on the strong side. By now, we would expect the Bank of Canada’s governing council to be already aware of the survey’s content. Senior Deputy Governor Wilkins appears in public twice this week. Will she opt to “leak” the report? That’s what Mr. Poloz did last July when he came out with a very hawkish message prior to the publication of a very strong BOS.
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