{"id":108787,"date":"2025-10-30T12:06:07","date_gmt":"2025-10-30T12:06:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/108787\/"},"modified":"2025-10-30T12:06:07","modified_gmt":"2025-10-30T12:06:07","slug":"business-brief-the-bank-brings-focus-to-the-budget","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/108787\/","title":{"rendered":"Business Brief: The bank brings focus to the budget"},"content":{"rendered":"

Good morning. The Bank of Canada\u2019s signal that monetary policy has reached its limits is bringing new urgency to the federal government\u2019s long-anticipated budget next week. More on that below, along with the unlikely Blue Jays fanbase building across the border. (But can you blame them? One more win!<\/a>)<\/p>\n

Up firstIn the news<\/p>\n

Mining: Institutional investors are campaigning to keep Teck Resources Ltd. listed in domestic stock market benchmarks<\/a> after the miner completes its proposed merger with London-based Anglo American PLC.<\/p>\n

Investing: The recent expiry of a U.S. patent that was held for decades by investment giant Vanguard Group is threatening to upend<\/a> the growth of Canada\u2019s $650-billion exchange-traded fund industry.<\/p>\n

Energy: The group proposing a massive carbon capture project<\/a> in Alberta\u2019s oil sands has begun preliminary discussions with Ottawa\u2019s new Major Projects Office.<\/p>\n

Open this photo in gallery:<\/a><\/p>\n

Donald Trump raises a glass to Mark Carney at a dinner in South Korea.Adrian Wyld\/The Canadian Press<\/p>\n

To us?<\/p>\n

The seating planners at this South Korean dinner either don\u2019t follow the news or follow it extremely closely with comedic intent.<\/p>\n

Donald Trump played down the chances of a meeting with Prime Minister Mark Carney at a summit there this week after he broke off trade talks with Canada and threatened to raise tariffs on Canadian imports by 10 per cent. But the U.S. President ended up sitting across from Carney at a small, eight-seat event last night hosted by South Korean President Lee Jae Myung. Steven Chase reports from Gyeongju, South Korea<\/a>.<\/p>\n

In focusPassing the puck to Parliament<\/p>\n

Moving a lending rate up or down can only do so much. In explaining its decision to cut interest rates yesterday<\/a>, the Bank of Canada underscored the limits of what monetary policy can do to shape a recovery slowed by trade shocks and weak business investment. Its decisions alone \u201ccannot offset the long-term implications of U.S. tariffs or other sources of structural change,\u201d the bank said in its report<\/a>. \u201cThe primary focus of monetary policy is to maintain low and stable inflation.\u201d The benchmark rate now stands at 2.25 per cent, down another 25 basis points.<\/p>\n

\u201cMonetary policy \u2026 can\u2019t target the hard-hit sectors, aluminum, steel, and autos,\u201d Bank of Canada Governor Tiff Macklem told reporters in Ottawa. \u201cIt can\u2019t help companies find new markets. It can\u2019t help companies reconfigure their supply chains.\u201d<\/p>\n

The announcement shifts attention to Ottawa, where the federal government will outline its fiscal response in next week\u2019s budget. Economists expect the plan to deliver the largest deficit in years<\/a> \u2013 making it unlikely the Liberals will meet their campaign pledge to shrink the debt relative to the size of the economy.<\/p>\n

Over to you<\/p>\n

The bank\u2019s outlook implicitly leans on fiscal policy to carry more of the weight, signalling \u201cmore explicitly than we thought\u201d that it is unlikely to cut rates again, RBC economist Nathan Janzen said. \u201cA big factor in not having a worse economic outcome as a base case is that fiscal policy will step up to help address targeted trade weakness and some of these structural growth challenges.\u201d<\/p>\n

In the budget, markers watchers will be looking at whether projected spending charts a clear path to real, achievable results \u2014 on all the stuff the bank can\u2019t address with monetary policy. \u201cThe challenge is always turning those projected deficits and government spending into actual projects,\u201d Janzen said in an interview. \u201cThat\u2019s what will be watched \u2013 how much of the spending is on infrastructure, and how clear they are about the potential projects and timing of getting shovels into the ground.\u201d<\/p>\n

More planning around ports, for example, would make sense because it would support the work of diversifying trade opportunities away from the U.S. But many projects on that level haven\u2019t made it much further than a to-do list.<\/p>\n

Prime Minister Mark Carney has announced at least the outlines of the government\u2019s flagship priorities: a Major Projects Office<\/a> to speed infrastructure approvals, a housing agency<\/a> to expand construction capacity, and a pledge to lift defence and security-related spending<\/a> to 5 per cent of GDP by 2035 \u2013 roughly $150-billion a year once fully implemented.<\/p>\n

Markets are as concerned with the quality of Ottawa\u2019s spending as with the speed of its delivery. Fiscal measures, like interest-rate cuts, take months to roll through the economy. Deficits in the range of 2 to 3 per cent of GDP \u2013 among the largest in recent years \u2013 would still give the economy a meaningful boost once the money begins to flow, Janzen said.<\/p>\n

\u201cThe risks, as they always are, are around implementation,\u201d he said.<\/p>\n

A different course<\/p>\n

The Bank of Canada\u2019s latest rate cut could be the last of an easing cycle that began in May, 2024 \u2013 when it trimmed borrowing costs for the first time in more than four years after a historic run of hikes. The policy rate has dropped to 2.25 per cent from 5 per cent over that period, a descent that began as inflation cooled and housing demand showed signs of turning around.<\/p>\n

That trajectory was nudged off course when U.S. President Donald Trump imposed tariffs on Canadian metals, autos and other goods to bolster U.S. manufacturing. While many exports remain exempt under the trade agreement, those levies \u2013 together with weak investment and slowing productivity \u2013 have dampened growth. Even with another cut, a cloudy outlook is expected to keep potential homebuyers on the sidelines<\/a> in Canada\u2019s largest real estate markets.<\/p>\n

In its new outlook<\/a>, the bank projects GDP to rise only 1.4 per cent annually through 2027, well below earlier expectations. It said monetary policy can cushion short-term slowdowns but \u201ccannot offset\u201d the uncertainties and geopolitical gyrations now reshaping the economy.<\/p>\n

Read more<\/p>\n

Jays watchA budding cross-border bandwagonOpen this photo in gallery:<\/a><\/p>\n

Bob Reaume, owner of Bob Reaume Sports in Windsor, Ont., holds a new Toronto Blue Jays World Series ball cap with a new American League Champions t-shirt,, Tuesday, Oct. 28, 2025.Dax Melmer\/The Globe and Mail<\/p>\n

In Windsor, Ont., U.S. tariffs and talk of annexation have turned long-time Detroit Tigers fans toward an unlikely refuge \u2013 the Toronto Blue Jays<\/a>.<\/p>\n

Up nextAlso on our radar<\/p>\n

At the bell: Earnings we\u2019re following include Canadian Natural Resources and Restaurant Brands, the parent company of Tim Hortons. Imperial Oil, Cenovus and Magna are up tomorrow. You can find our full calendar of events and earnings here<\/a>.<\/p>\n

On the morrow: Canada reports gross domestic product for August. Economists aren\u2019t expecting much.<\/p>\n

The measure of metal: Prices of copper, considered a bellwether for the global economy, have risen more than 27 per cent so far this year. Analysts are warning that a fresh high could forebode a fall<\/a>.<\/p>\n

Morning update<\/p>\n

Global markets were lower<\/a> after U.S. President Donald Trump said he had made a deal<\/a> with Chinese President Xi Jinping on rare earths and tariffs.<\/p>\n

Wall Street futures were in negative territory ahead of more Big Tech earnings, while TSX futures were flat. <\/p>\n

Overseas, the pan-European STOXX 600 was down 0.42 per cent in morning trading. Britain\u2019s FTSE 100 fell 0.37 per cent, Germany\u2019s DAX declined 0.14 per cent and France\u2019s CAC 40 dropped 0.58 per cent. <\/p>\n

In Asia, Japan\u2019s Nikkei closed 0.03 per cent higher, while Hong Kong\u2019s Hang Seng declined 0.24 per cent. <\/p>\n

The Canadian dollar traded at 71.68 U.S. cents.<\/p>\n","protected":false},"excerpt":{"rendered":"Good morning. The Bank of Canada\u2019s signal that monetary policy has reached its limits is bringing new urgency…\n","protected":false},"author":2,"featured_media":108788,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[2571,138,78261,219,111,11958,6042,139,14485,69],"class_list":["post-108787","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-appwebview","tag-business","tag-businessbrief","tag-economy","tag-new-zealand","tag-newnewsletter","tag-newsletter","tag-newzealand","tag-noastack","tag-nz"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/108787","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=108787"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/108787\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/108788"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=108787"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=108787"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=108787"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}