Even if economic conditions would normally justify lower rates, concerns about inflation, investor sentiment, and higher government borrowing costs may force the central bank to pause or slow the pace of cuts.
For mortgage professionals, this means rate relief could be less predictable and more dependent on fiscal decisions coming out of Ottawa.
Investment, productivity, and the road ahead
Meanwhile, Marion and other economists have argued that targeted investment, particularly in infrastructure and energy, could help boost Canada’s lagging productivity. “We’ve been stranding these assets by not knowing whether or not we could exploit them down the road,” Marion said.
He also cited the country’s clean electricity sector as a major opportunity for foreign investment.
Still, the Bank of Canada’s next moves will likely hinge on the details of Ottawa’s budget. Marion predicted a quarter-point rate cut to 2.25% at the next meeting, but said policymakers would probably pause to assess the fiscal outlook. “It will be a stimulative budget,” Marion said.