The Canadian federal government announced its Budget 2025 yesterday. The government is focused on making impactful investments that might transform Canada’s economy and set it up for success now and in the future. Canada’s economy has come under immense pressure this year as the US imposed tariffs on many Canadian goods, disrupting trade activity with its largest trade partner. Meanwhile, Bank of Canada (BoC) Governor Tiff Macklem said the BoC has rates in a position to help boost economic activity while keeping inflation in check.

• Canadian Finance Minister Francois-Philippe Champagne delivered the federal budget yesterday. This was the first budget for Prime Minister Mark Carney, who has pledged to help transform Canada’s economy and diversify its reliance on the US.
• The government will be spending billions on infrastructure and housing. Help is also on the way for sectors and workers that have been hard hit by tariffs. Spending and tax breaks will be widespread, meant to support households and businesses.
• The budget will also serve as a confidence vote in the government. An outright rejection of the budget could result in another election. Meanwhile, a higher deficit could weigh on foreign investors’ confidence in Canada.
• The BoC has also taken steps to help support the Canadian economy. At a conference on Monday, Governor Macklem said rates are near the lower end of the BoC’s neutral range. Macklem believes this level will help spur consumer and business activity but also keep inflation from rising too much.

As promised, Prime Minister Mark Carney’s budget has set out to support and transform Canada’s economy amid a fractured trade relationship with the US. Canada’s economy is operating in a challenging trade environment, but, as in the past, it consistently finds ways to adapt and grow over time. The government and BoC hope their support measures will help Canadian households and businesses, along with the overall economy, thrive over the short- and long-term.

If you would like to discuss this economic and market update or have questions about your finances and investments, please feel free to contact me anytime.