Will the Bank of Canada Cut Rates? Job Losses and Tariff Tensions Make It a 50/50 Call

Canada’s job numbers just slipped-and the Bank of Canada might be gearing up to react. In March, the country lost 33,000 jobs, marking the first employment decline in over three years. Economists are now giving even odds (50%) that the BoC will respond with an interest rate cut on April 16.

This sudden shift is being blamed on two main issues: rising trade tariffs and economic uncertainty tied to global tensions-especially with the United States.

What Happened in March?

According to Statistics Canada (2025), employment in March fell by 33,000 positions, with full-time jobs dropping by 62,000. This marks the first monthly job loss since January 2022.

Unemployment rate increased to 6.7%, the first rise since November 2023.
Wholesale and retail trade saw a loss of 29,000 jobs, while information, culture, and recreation sectors dropped 20,000 positions.
Most of the job losses were in Ontario, Alberta, and Quebec, despite small gains elsewhere.

📊 Source: Statistics Canada. (2025, April 5). Labour Force Survey, March 2025. https://www150.statcan.gc.ca/

Market Reaction: Not Good

On the same day the jobs report dropped, markets tanked. The TSX fell nearly 1,000 points, and U.S. stock markets posted their second day of losses (Financial Post, 2025). The Canadian dollar fell from $0.7064 to $0.7024 USD, and the 5-year bond yield dipped from 2.51% to 2.36%, before partially rebounding to 2.46%.

💵 Source: Financial Post. (2025, April 5). TSX slides nearly 1,000 points on job losses and tariff fears.

Why Are Jobs Disappearing?

According to TD Economics, the impact of rising trade tariffs and political uncertainty is making both businesses and consumers hesitant to spend and invest (Orlando, 2025).

These job losses were especially pronounced in private-sector industries that are more sensitive to the economy’s ups and downs. TD’s James Orlando wrote that the “discouraging jobs report showcases the downside risks to the economy, which warrants further action from the BoC.”

🧠 Source: Orlando, J. (2025, April 5). TD Economics Daily Commentary. TD Economics.

Some Silver Linings

Not all the data was bad. There were two small positives:

Total hours worked rose by 0.4% in March and are up 1.2% year-over-year.
Average hourly wages grew by 3.6% compared to March 2023 (Statistics Canada, 2025).

What Are the Odds of a Rate Cut?

Before the job report, markets were pricing in a 34% chance of an interest rate cut on April 16. But after the data came out—and markets reacted poorly—odds jumped to 49% (Bloomberg, 2025).

📈 Source: Bloomberg. (2025, April 5). Market-implied rate cut probabilities.

Scotiabank’s Derek Holt argues the BoC is more concerned with the bigger threat of a global trade war than just one bad jobs report. He also questioned the data’s accuracy, noting that Statistics Canada used its lowest seasonal adjustment factor on record for the month of March—which may have exaggerated the decline (Holt, 2025).

📘 Source: Holt, D. (2025, April 5). Scotiabank Economics Market Insight.

What Experts Are Saying

BMO’s Douglas Porter says this report “keeps prospects of an April rate cut very much alive,” though he doubts it will happen immediately (Porter, 2025).
Desjardins’ Laura Gu believes the BoC will take a “wait-and-see” approach unless things worsen (Gu, 2025).
TD’s Orlando thinks the Bank of Canada should cut by at least 50 basis points in the coming months to “cushion the blow” from tariffs (Orlando, 2025).

Final Thoughts: Eyes on April 16

Whether or not a rate cut comes this month, one thing is clear: Canada’s economy is wobbling under the weight of job losses and global trade fears. The Bank of Canada will face intense pressure to take action if volatility continues.

References

Bloomberg. (2025, April 5). Market-implied rate cut probabilities. Bloomberg Markets.
Financial Post. (2025, April 5). TSX slides nearly 1,000 points on job losses and tariff fears. https://financialpost.com
Gu, L. (2025, April 5). Desjardins Economics Outlook. Desjardins.
Holt, D. (2025, April 5). Scotiabank Economics Market Insight. Scotiabank.
Orlando, J. (2025, April 5). TD Economics Daily Commentary. TD Economics.
Porter, D. (2025, April 5). BMO Capital Markets Economic Update. BMO Economics.
Statistics Canada. (2025, April 5). Labour Force Survey, March 2025. https://www150.statcan.gc.ca/

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