07:23 AM EDT, 04/29/2025 (MT Newswires) -- The parliamentary ballots are still being tallied in Canada, but as CICB went to print, major media outlets are projecting a Liberal government.

That would have been a major upset a couple of months ago, but pollsters had generally predicted a Liberal victory. What's still up the in the air, is whether the Liberals have a parliamentary majority, or whether they will need the support of either the NDP or the Bloc Quebecois.

Mark Carney will be choosing a cabinet and getting down to business as Canada's 24th prime minister in the next day, wrote the bank in a note to clients. While the election was the fourth consecutive win for the Liberals, the change in leadership from PM Justin Trudeau to Carney will bring with it some notable policy changes, given both the heavy hand that recent PMs have played in setting the government's course, and the need to respond to a changing economic environment ahead, stated CIBC.

Budget deficits look likely to head higher in the near term, as would typically be the case when an economic shock, in this case from trade frictions, hits revenues and prompts fiscal stimulus measures. Deficits are likely to somewhat exceed what the Liberals suggested during the campaign, while still tracking miles below United States federal deficits as a share of gross domestic product.

If this ends up being a minority government it could also put some additional upward pressure on deficits, pointed out the bank. Gaining support in parliament from either the NDP or the Bloc could mean allocating additional funds towards those parties' priorities, including health care for the NDP, and items of importance for the Bloc (healthcare, other transfers, support for the metals sector). Some of that might be funded by delaying some of the Liberal's own initiatives rather than by running an even larger deficit.

In addition to news on upcoming talks with U.S. President Donald Trump on tariffs, several events on the calendar will provide further insights into the public policy direction, added CIBC. The reality is that the Trump Aministration might also pivot on its own in the face of pressure to avoid an unpopular spike in inflation, although that would be facilitated by Canada agreeing to some undertakings that the U.S. could position as a "win" for American interests.

In Canada, first up will be the choice of a new cabinet, likely larger than the interim cabinet that ran things during the election, allowing Carney to place his stamp on the government's leadership, according to the bank. The Throne Speech that opens the new session of parliament should clarify which of the items in the campaign platform are set to be tackled early in the mandate.

However, an updated costing of these proposals, along with a new baseline revenue forecast, won't be forthcoming until the actual Budget. Typically, that would have taken place in March, but having been delayed by Monday's election, markets are likely looking at June, noted the bank. So it's going to be a busy spring for investors with interests in Canada's bonds, foreign exchange and equities with sensitivity to environmental, regulatory and trade policies.