Budget big but not “generational”

The 2025 Budget leaves the federal deficit roughly double its current size out till the end of the decade, but it will still average just 2.5% of GDP, implying the new measures hardly constitute the “generational” change Finance Minister François-Philippe Champagne had promised. With the majority of spending focused on long-term defence and infrastructure projects, today’s announcement increases the likelihood that the Bank of Canada will still have to cut its policy rate below neutral to support growth.