Canada’s economy lost 17,700 jobs in April, while the unemployment rate climbed to 6.9%, its highest level in six months. Normally, weaker employment data would strengthen the case for interest rate cuts.
However, rising oil prices are complicating the outlook.
Key Takeaways
- Canada lost jobs and unemployment increased.
- Economic weakness typically supports lower interest rates.
- Rising oil prices are creating inflation concerns.
- The Bank of Canada is still expected to hold rates steady in the near term.
- Mortgage rates may stay higher for longer.
Why It Matters
A softer labour market suggests inflation pressures could ease as hiring slows and consumer spending weakens. But higher energy costs can push inflation higher, making it harder for the Bank of Canada to justify cutting rates.
This puts policymakers in a difficult position: support a slowing economy or continue fighting inflation.
Impact on Mortgage Borrowers
Variable-Rate Mortgages
Variable rates depend on Bank of Canada decisions. For now, markets expect the central bank to leave rates unchanged.
Fixed Mortgage Rates
Fixed rates are influenced by bond yields and inflation expectations. Rising oil prices could keep upward pressure on yields, limiting rate declines.
The Bottom Line
Canada’s latest jobs report points to a slowing economy, but inflation remains the key concern. As long as oil prices stay elevated, the Bank of Canada may be reluctant to lower rates quickly.
For homeowners, buyers, and borrowers, that means planning for a higher-rate environment may still be the safest approach.
FAQ
Will Canada cut rates soon?
Not necessarily. Weak employment supports cuts, but inflation risks from higher oil prices could delay them.
How do oil prices affect interest rates?
Higher oil prices can increase inflation, making central banks more cautious about lowering rates.
What does this mean for mortgages?
Mortgage rates may remain relatively stable or higher than expected until inflation pressures ease.
Cedric Pelletier – Mortgage Associate – 05.2026