Prime minister pledges to protect Canada and tackle the nation's housing shortage

By Candyd Mendoza

29 Apr. 2025

In one of Canada’s most consequential elections in decades, Mark Carney secured a historic victory.

However, it remains uncertain whether his Liberal Party will reach the 172-seat threshold needed for an outright majority, with full results expected by early Tuesday morning.

The election was widely seen as a referendum on leadership strength against external threats, particularly President Donald Trump, who inflamed tensions by threatening to annex Canada and imposing heavy tariffs.

"As I've been warning for months, America wants our land, our resources, our water, our country," Carney told supporters Monday night. "These are not idle threats. President Trump is trying to break us so America can own us. That will never... ever happen."

Carney’s firm stance quickly drew praise on the international stage.

Ursula von der Leyen, president of the European Commission, wrote on X: "I look forward to working closely together, both bilaterally and within the G7. We'll defend our shared democratic values, promote multilateralism, and champion free and fair trade."

Australian Prime Minister Anthony Albanese echoed the sentiment, posting: "In a time of global uncertainty, I look forward to continuing to work with you to build on the enduring friendship between our nations, in the shared interests of all our citizens."

Carney’s path to leadership

Carney, 60, brought extensive financial experience to his political debut. A former investment banker, he previously served as the head of the Bank of England during Brexit and the governor of the Bank of Canada during the 2008 financial crisis.

Despite never holding elected office before, Carney was named leader of the Liberal Party in March. His background in finance and calm demeanor helped persuade voters he was the candidate best equipped to counter Trump’s unpredictable policies.

Carney defeated Pierre Poilievre, the 45-year-old leader of the Conservative Party. Poilievre had led the polls for more than a year, at one point with a 27-point advantage over the Liberals. His momentum shifted after former Prime Minister Justin Trudeau resigned in January, giving the Liberals a much-needed boost.

The turning point came as Trump intensified his attacks on Canada’s economy and sovereignty, culminating in a provocative social media post on election day suggesting Canada could become the 51st US state.

Poilievre’s campaign, characterized by Trump-style rhetoric, including a "Canada First" slogan, promises of tighter borders, smaller government, and opposition to "wokeness," resonated early on. However, his perceived alignment with Trump ultimately damaged his standing with voters.

This loss marks the Conservative Party’s third consecutive defeat in federal elections, leading analysts to predict internal debates over its future direction.

Carney’s promises

In addition to foreign policy concerns, housing emerged as a pivotal issue throughout the campaign. Experts believe no single party has a full solution, but acknowledge progress is being made.

"I don’t think any of the parties are going to have enough to solve the crisis, but they are moving in the right direction," said Mike Moffatt, senior director of policy and innovation at the Smart Prosperity Institute.

The Liberal Party’s housing platform includes a plan to double the pace of homebuilding, targeting 500,000 units per year over the next decade. A new crown corporation, Build Canada Homes, would lead this effort by directly engaging the federal government in home construction.

Read next: Housing policies a key issue for Canadian voters ahead of election

"Well, the federal government’s been doing this a little bit since 2017. Carney is suggesting he take it further and actually act as a developer and create a new crown corporation," Moffatt explained.

However, Moffatt cautioned that while the plan is ambitious, scepticism is warranted. "It’s an ambitious plan, but I think a little bit of skepticism is warranted because it is so ambitious, creating a new crown corporation out of scratch to be a developer, it’s going to be a challenge for the government to pull off," he said.

He also highlighted structural obstacles: the federal government has no direct control over municipalities, limiting its ability to mandate lower development charges, which Moffatt said all parties agree are “far too high.”

"What they can do is, create a bunch of incentive programs and try to incentivize municipalities to do the right thing, but they can’t force them to do it, and there’s always challenges around coming up with agreements and actually making sure that those municipalities live up to their word," he noted.

Central bank announces pause as trade tensions rumble on

By Fergal McAlinden
16 Apr. 2025

The Bank of Canada has hit pause on its rate-cutting path, keeping its benchmark interest rate unchanged in April as it weighs up the likely impact to the Canadian economy of US president Donald Trump’s global trade war.  

The central bank said on Wednesday morning it was leaving its overnight rate at the current level of 2.75%, opting against bringing borrowing costs lower again amid lingering concern about the possible effect of Trump’s tariffs on Canadian inflation.  

Money market odds of a rate cut jumped yesterday after the consumer price index (CPI) unexpectedly dipped to 2.3% despite economists’ projections that it would remain unchanged from February at 2.6%.  

But analysts still saw a roughly 50% chance that the Bank would leave rates untouched, with its prior decision (a 25-basis-point cut in March) seeing central bank officials emphasize the need to balance the potential negative economic impact of Trump’s policies – which include steep levies against Canadian steel and aluminum – with upside risks to inflation.  

The move marks the first time in nearly a year that the Bank has left rates unchanged, having introduced seven consecutive cuts since last April and moved that benchmark rate from a two-decade high of 5%.  

Leading banks are likely to leave their own prime rates unchanged – and the Bank’s path ahead on rates for the remainder of 2025 is also unclear. Trump’s tariff war could see prices rise sharply while a potential recession is also looming into view, with the central bank’s first-quarter business outlook survey indicating that around 32% of surveyed firms now expect the economy to see a downturn, up sharply from 15% in Q4.  

Top lenders including TD, Royal Bank of Canada (RBC) and Canadian Imperial Bank of Commerce (CIBC) expect the benchmark rate to land at 2.25% by the end of the year, while Bank of Montreal (BMO) and National Bank see that rate slipping to 2% before January.  

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Housing supply crisis shows little sign of improving

By Fergal McAlinden
15 Apr. 2025

Housing starts surprisingly fell by 3.3% last month in Canada compared with February as a sluggish pace of national homebuilding this year continued.

Data from national housing agency Canada Mortgage and Housing Corporation (CMHC) showed on Tuesday that the seasonally adjusted annualized rate (SAAR) of housing starts slid to 214,155 units last month, down from a revised 221,405 units in February.

That marked an unexpected dip, well below economists’ projections of 242,500 starts for the month, and the second monthly decline after starts also dived in February.

In centres with a population of 10,000 or greater, actual housing starts came in at 14,924 units compared with 17,052 the same time last year, while the monthly SAAR for those centres fell by 2.8% (from 209,093 units to 203,285).

The pace of housing starts in Montreal surged in March, jumping by 138% year over year thanks mainly to an increase in multi-unit starts. Still, that trend was offset by significant declines in Vancouver and Toronto, which saw starts fall by 59% and 65% respectively.

Multi-unit starts in Vancouver were well down, while multi-unit and single-detached starts fell in Toronto.

The pace of home construction shows little sign of rising to the levels needed to ease Canada’s housing crisis, with national supply levels still millions short of what CMHC says is required to make housing affordable for all Canadians by 2030.

Actual housing starts ticked slightly upwards in 2024 compared with the previous year, the housing agency said in January, increasing by 2% in centres with a population of 10,000 or more.

Overall unit starts came in at 227,697 for the year compared with 223,513 in 2023, with the total for all areas in Canada also increasing by 2% year over year to 245,120 units.

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Consumer price index falls in March, boosting prospects of another rate reduction

By Fergal McAlinder
15 Apr. 2025

Canada’s inflation rate fell by more than expected in March, sliding to 2.3% and boosting odds of a central bank interest rate cut tomorrow (April 16).

Statistics Canada said on Wednesday that the consumer price index (CPI) slowed compared with the same time last year, down from 2.6% in February and lower than economists polled by Reuters, who forecasted no change in March, had expected.

That decline was spurred mainly by lower costs at the pump and a decline in travel tours prices, although core measures of inflation – the Bank of Canada’s preferred gauge – remained elevated.

Mortgage interest costs were a significant contributor to overall price growth, rising by 7.9% on a year-over-year basis, while rent prices (5.1%) were also up. Food purchased from restaurants, passenger vehicle insurance premiums, and property taxes and other special charges jumped compared with the same time in 2024.

Money markets priced odds of a central bank rate cut tomorrow at approximately 50-50 in the wake of the latest inflation data, having previously seen chances of a reduction at just higher than a third.

Following its last benchmark rate decision, a 25-basis-point cut in March, the central bank emphasized the importance of keeping inflation under control as US president Donald Trump’s trade war threatens to drive prices upwards.

But Tuesday’s inflation reading opens the door to another cut tomorrow, according to Canadian Imperial Bank of Commerce (CIBC) economist Katherine Judge.

“The easing in price pressures is consistent with the Bank of Canada cutting interest rates by 25 basis points at tomorrow’s meeting,” she wrote, “with the downside risks to growth from the trade war outweighing any upside to inflation from tariffs in our view.”

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