BoC's 50 basis point rate cut not guaranteed

The unemployment rate has fallen, raising doubts about a bigger rate cut.

The September employment data was better than expected, with the economy adding nearly twice as many jobs as economists had forecast, pushing the unemployment rate down to 6.5% from 6.6%. That's the first decline since the start of the year.

Economists are looking at the data as a factor in whether the BoC will cut rates by 50 basis points at its Oct. 23 meeting or take the standard 25 basis point cut.

Underlying weaknesses: David Rosenberg, founder of Rosenberg Research, notes that if the participation rate had not fallen, the unemployment rate would have reached 6.7%, in line with analysts' expectations.

The number of people looking for work for more than six months is also rising, indicating a weakening labor market. As a result, the Bank of Canada's more likely move will be to cut the rate by 25 basis points rather than 50.

Anastasia Chupina