While the whole world is fixated on the Federal Reserve's rate cut calendar, the Bank of Canada has suddenly made a 180-degree turn.

Recent data circulating in the market is a bit baffling—traders are now almost fully betting that the Bank of Canada will hike rates before October 2026. Just a few weeks ago, everyone was still discussing how many times rates would be cut next year. The speed of this shift rivals the volatility in the crypto market.

Why the sudden change? The core reason is actually quite straightforward: the employment data is just too strong.

The unemployment rate in November dropped sharply, and job creation far exceeded everyone’s expectations. The signals of an overheated economy are already very clear. The central bank’s biggest headache right now isn’t recession, but whether inflation will make a comeback. The bond market instantly panicked, with government bond yields shooting up, as if to remind everyone: don’t assume the whole world will follow the Fed’s pace—countries with strong economies can absolutely go their own way.

**Booming Employment, Policy Reversal**

This time, the Bank of Canada's hawkish turn was triggered by that insanely strong jobs report. The unemployment rate fell, and job growth exceeded expectations. In this situation, Governor Macklem’s previous statements seem especially prescient—when domestic demand pressures become obvious, they’ll act immediately.

Actually, this isn’t the first time the Bank of Canada has done something like this. During the inflation peak in 2022, they made a single 100 basis point rate hike, raising rates to 2.5%. Back then, June’s CPI hit 8.1%, a nearly 40-year high, and the central bank’s actions were quite aggressive.

It now looks like an independent monetary policy path may become the norm. For the crypto market, this means the liquidity environment will become even more fragmented, and we can no longer simply use the logic of “Fed rate cuts = risk asset rally.”