Key points:
- The January inflation watch resulted in 121,000 new jobs created in Canada, but inflation declined to 5.9%.
- Although job growth last month was unexpectedly excessive, in general we are on the right track with the drop in inflation.
January 2023 inflation watch
In this video, I go into detail about the Bank of Canada’s inflation numbers for January, what they mean, and why they matter.
Don’t feel like watching? Find the full transcript below!
Chris: [00:00:00] This week, the Bank of Canada released the January 2023 inflation numbers. Now, why do we care about inflation numbers so much is because the direction of inflation determines the direction of interest rates, And the direction of interest rates ultimately determines the direction of real estate in the GTA. And that matters because if you’re trying to time out the bottom of the market or looking for signs that it’s the right or the wrong time to be making a move, this is it. So let’s dive right into the numbers.
High job growth, but a decrease in inflation
Chris: [00:00:29] On February tenth, Statistics Canada released the employment numbers for the month of January 2023. Now, economists were expecting a puny 5000 new jobs created for the month. Instead, the number came in like an atomic bomb. 121,000 new jobs were created in January, blowing estimates out of the water. Now, typically, job creation is a good thing, right? We want people to be working and living their best lives. But in an inflationary environment, job numbers like this that far outside of the forecast are seen as inflationary and that put a lot of pressure and expectation on the Bank of Canada to maybe not be done with interest rate increases.
Chris: [00:01:18] Then on February 21st, the January 2023 inflation numbers were released. Economists were anticipating a 6.1% reading. Instead, the reading came in better than expected at 5.9%, and this was seen as very positive. It takes pressure off the Bank of Canada to do anything in the March meeting and supports the thesis that interest rates will continue to stabilize and trend downward as we head throughout 2023.
Need more help or information?
Chris: [00:01:50] The next inflation reading is scheduled for March 21st, 2023. We will continue the inflation watch at that time. Until next time. My name is Chris Molder. I’m a Toronto mortgage broker. Bye for now.
If you’d like to discuss your mortgage, you can contact me here or schedule a convenient call time directly into my calendar below.
