06:47 AM EST, 11/22/2024 (MT Newswires) -- The government of Canada Thursday unveiled a fresh stimulus package

designed to "give Canadians more money in their pocket" ahead of the

holiday season, noted National Bank of Canada.

These tax breaks are entirely a 2024-25 story, the 'rebate' being a one-time payment and the HST holiday ending Feb. 15, 2025.

The bank said it doesn't expect these new measures to have a

"substantial" impact on monetary policy decisions. After all, this amounts to less than 0.3% of gross domestic product. Worthy of a slight growth upgrade to be sure but unlikely to have a significant or sustained inflation impact.

However, the spending announcement doesn't come in isolation, pointed out National Bank. Stimulus efforts are also underway at the provincial level too, with Ontario readying a similar taxpayer 'rebate'.

Meanwhile, recent inflation data came in stronger than expected at the same as housing market activity accelerated and the unemployment rate stabilized -- at least temporarily.

The bank had argued that the size of the output gap warrants a rapid return to neutral via a 50bsp cut in December but for a central bank putting all its eggs in the data dependence basket, that's become a harder sell.

If the Bank of Canada, like financial markets, viewed the 25bps versus 50bps rate cut debate as a coin toss back in October, recent developments may push it to 25 bps, stated National Bank. But even if easing is more gradual in the near term, the bank isn't fundamentally recasting its Canadian outlook or its forecast of the terminal rate on what amounts to a modest, even if ill-timed spending announcement.