TSX Closer: The Index Falls Again as the Bank of Canada Expected to Stand Pat on Rates

04:21 PM EST, 12/08/2025 (MT Newswires) -- The Toronto Stock Exchange fell for a second-straight session on Monday on fading expectations for an interest-rate cut this week from the Bank of Canada.

The S&P Composite Index closed down 141.44 points to 31,169.97, continuing to drop off last Thursday's record high of 31,477.57. Most sectors were lower, with communication services, health care and materials leading the decliners.

The Bank of Canada will meet on Wednesday to deliver its latest interest-rate decision, with the central bank widely expected to stand pat.

"The Bank of Canada is set to leave its policy rate unchanged at 2.25%, after declaring in October that it is "at about the right level" to keep inflation near target and help the economy through a structural adjustment. Forecasters unanimously expect a hold and OIS markets see no chance of a cut," National Bank Economics wrote. "After October's rate cut, many were skeptical the BoC easing cycle was over. But implied cut odds were gradually-and then abruptly-pared after stronger-than-expected jobs, inflation and GDP data."

Economists see the central bank's decision coming after last week's report showing unexpectedly strong November employment gains and after a rise in third-quarter GDP that exceeded forecasts, showing growth continued amid the U.S. tariff battles. With the economy advancing, there are some expectations the BoC's rate-cutting cycle is complete and its next move could be a hike.

"There is unlikely to be a significant market reaction to the (stand-pat) decision, although risks like in the hawkish direction given that the unemployment rate has fallen sharply over the last two months. As he did in October, Governor Macklem is likely to stress the implications that flow from lower potential output growth on the output gap and policy," David Doyle, head of economics at Macquarie Group, wrote. "Our forecast for the BoC is that the rate cutting cycle is complete. As we outlined in our team's 2026 Global Economic and Market Outlook, we believe the next move will be a rate hike with our baseline timing for this in 4Q26."

On commodities, gold traded lower late afternoon on Monday as markets await Wednesday's interest-rate decision from the Federal Reserve's policy committee. Gold for February delivery was last seen down US$21.50 to US$4,221.50 per ounce.

West Texas Intermediate (WTI) crude oil closed lower on Monday, but remained within a narrow range as the attention of traders switches to high supply and away from geopolitical risks. WTI crude oil for January delivery closed down US$1.20 to settle at US$58.88 per barrel, while February Brent oil was last seen down US$1.31 to US$62.43

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