With the latest central bank interest rate moves, are investors positioned for the right environment?

Financial Post · Martin Pelletier · 2026-11-02 11:04 UTC

Martin Pelletier: One question is whether monetary and financial conditions are really as tight as many investors think

Last week brought an interesting divergence in North American monetary policy. The Bank of Canada raised its policy rate by 25 basis points to 2.5 per cent, its first increase since 2023, while the U.S. Federal Reserve held its rate at 3.75 to four per cent.

Judging by the reaction to Canada’s rate hike, my take is certainly a contrarian one: I think the Bank of Canada made the right call. I also wonder whether the Fed will ultimately wish it had done the same this month.

Admittedly, the Canadian employment numbers make this a difficult argument. Canada lost 68,000 jobs in September after losing another 42,000 in August, while unemployment climbed to 6.5 per cent. But September’s losses were concentrated in the public sector, which shed 70,000 positions. Private-sector employment was up by 163,000 jobs, or 1.2 per cent higher than a year ago.

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