Limited near-term boost
Economists at Bank of Montreal, Robert Kavcic and Shelly Kaushik, reached similar conclusions. “We estimate net new announcements of $4 billion for this fiscal year and a bit more for the next,” they said in an analysis of the budget.
“The important takeaway here is that there is indeed a large wave of stimulus hitting the economy, but we already knew about the vast majority of it, and therefore won’t be scrambling to sharply revise up our growth forecast in the wake of this budget,” they said.
“Additionally, Ottawa is banking on an acceleration in private-sector investment with the aid of fast-tracked approvals across a range of projects/industries — that’s certainly encouraging, but success there will depend highly on execution,” the BMO economists added.
Implications for mortgage markets
For lenders, brokers and homebuyers, the conversation now turns to whether interest rates have further to fall — and how fast.
Capital Economics, which has generally taken a more dovish stance than market consensus, has projected that the central bank may deliver two additional 25-basis-point reductions next year. That would push the policy rate below the lower end of the Bank of Canada’s estimated neutral range of 2.25 per cent to 3.25 per cent — the level at which rates are considered neither stimulative nor restrictive.
