By Douglas Porter

November 6, 2026

The title is obviously a shortened version of the quote widely attributed to Vladimir Lenin: “There are decades where nothing happens; and there are weeks where decades happen.” Between the U.S. midterm elections, the Canadian federal budget, jobs reports on both sides of the border, more central bank rate moves, and a full correction in tech stocks, it was hard to know where to look—one very shrewd observer averred that it was like the Super Bowl for economists this week.

We will leave the election analysis to the professionals, but from Canada’s perspective, the biggest piece of good news is that voters pretty clearly showed that the trade war was a political loser—and presumably both parties will take that on board in the future. Still, it remains to be seen if anything will fundamentally change in the U.S./Canada trade relationship in the near term, despite some tantalizing hints of progress in the days leading up to the vote.

Turning to the headline Budget, we’ll focus on the macro implications (and there was a surprising deluge of micro measures). For a document that arrived with little fanfare, it was actually quite meaty. In a nutshell, the government was handed yet another large revenue windfall—this time from the oil price surge—and promptly turned around and found lots of priorities on which to spend almost all of it.

Giving some credit, note that the deficit for the past fiscal year (ending in March/26), which was unveiled in the Budget, looks to come in much lower than expected at $39.3 billion (1.2% of GDP); that is almost precisely half of what was expected in last year’s document, a massive win to the good side. Yet, this year’s deficit outlook is almost unchanged at $62.3 billion (1.8% of GDP), and a similar tally is expected for the coming year.

Sorting through the various measures, Ottawa estimates net new spending of $15 billion in the current fiscal year (0.4% of GDP) and $34 billion next (1% of GDP), including a raft of previously announced measures. To be clear, that’s including the big-ticket Productivity Mega Deduction, which will cost $36 billion over five years. All in, that’s a significant push of fiscal stimulus, and we bumped up our growth call for 2027 post-Budget by two ticks to 2.0%, versus just under 1% this year. It’s fairly clear which way the wind is still blowing with this Budget, and that’s to support the economy and boost growth.

That conclusion brings us to a notable exchange in testimony by Bank of Canada Governor Tiff Macklem this week before the House Finance Committee. Macklem stated that there was no friction between fiscal and monetary policy, since the former was not yet putting any upward pressure on inflation. We would turn the reasoning on its head.

One could readily suggest that the two policies are indeed working at cross purposes: fiscal policy is very clearly attempting to boost growth, even through higher demand (note the $4 billion top-up in the Groceries & Essentials Benefit at the start of 2027), while with last week’s rate hike, monetary policy is very clearly attempting to cool growth. If that’s not rowing in different directions, it’s not at all obvious what would count as policy friction.

Where there wasn’t any friction was the renewed five-year inflation framework, which was also unveiled with the Budget. To the surprise of none, the inflation target will remain at 2%, with the focus on the 12-month headline CPI rate. Given that it remains stubborn at 3.1% and is likely to remain in that neighbourhood for some time, unless oil prices truly collapse, the pressure will remain on the BoC to tighten further. And fiscal stimulus will only add to the pressure.

However, amid the many moving parts this week, there were at least three new factors that may keep the Bank on hold in December at least.

First, oil prices took a big step back just before and after the midterms, taking WTI down to $90, and notably driving U.S. wholesale gasoline prices to their lowest level since early March. While obviously still volatile, this is a step in the right direction of relieving some pressure on headline inflation.

Second, the dramatic pullback in tech stocks—which saw the biggest single-day drop in market cap on record on Thursday and the Nasdaq reach official correction terrain—has at least raised some doubts on Fed rate hikes.

Finally, the day after the Budget, Canadian employment landed with a dull thud, falling 4,700 in October. While notoriously volatile, that marks the third decline in a row, and leaves jobs up just 0.1% from a year ago. Jarringly, the unemployment rate stepped up again by two ticks to 6.7%, even at a time that the labour force is barely growing (it’s actually down from a year ago).

Toting these items up, the market has become much more cautious on pricing in a BoC rate hike in December. Our official call is that the Bank pauses for one meeting and the end result of all this week’s many moving parts is to reinforce that view.

Policy Contributing Writer Douglas Porter is Chief Economist for BMO.