The Canadian federal government projects a C$62.3 billion deficit for the 2026-27 fiscal year. The forecast accounts for ongoing global supply disruptions and is slightly lower than the C$63.3 billion estimate from the Parliamentary Budget Officer and the government’s C$65.3 billion spring projection. Despite the lower-than-expected figure, the deficit remains substantial and could weigh on fiscal policy discussions in the coming months. Markets view the projection as potentially reducing the likelihood of a Bank of Canada rate hike, with current market pricing indicating a 64% chance of no rate change at the December decision. Statements from Bank of Canada officials, along with upcoming inflation and employment data, could further influence market expectations.
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