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Canada's Jobs Surge Reshapes Rate Cut Expectations for Borrowers

May's 88,000 job gains and falling unemployment complicate Bank of Canada's rate path as housing stabilizes

Canada's labour market delivered an upside surprise in May 2026, adding 88,000 jobs and pushing unemployment down to 6.6% from 6.9% in April. This employment surge, combined with inflation hovering at 2.8% year-over-year, has markets betting the Bank of Canada will hold rates steady this week for a fifth consecutive time. The housing market shows early signs of stabilization, with resale prices up 0.7% in Q1 2026 after three quarterly declines, though new home prices continue to edge lower. For borrowers, this means the anticipated rate relief may be pushed further into 2027, keeping mortgage costs elevated but potentially avoiding the economic downturn that typically triggers aggressive rate cuts.