Markets, Monetary Policy, and Mark Carney: Why the TSX Surged in 2025
Correlation, context, and the Bank of Canada’s role
Since Mark Carney became Prime Minister on March 14, 2025, the S&P/TSX Composite Index has risen strongly. At first glance, this looks like a story of political leadership. But the market’s movement reflects a deeper interplay of fiscal signals, monetary policy, global equity trends, and Canada’s commodity cycle.
What the numbers say
- TSX March 2025 close: ~24,917
- TSX October 1, 2025: ~30,108
- Price return: about +20.9% in just over six months
- Total return: likely closer to +23–25% once dividends are included
The Bank of Canada factor
Monetary policy has been central. In March, the BoC rate stood at 3.00%. By Sept 17, 2025, it was lowered to 2.50%. These cuts reduced borrowing costs, buoyed corporate expansion, and supported exporters via a softer Canadian dollar.
Global alignment
- U.S. equities also gained through 2025, reflecting a wider risk-on environment.
- Canada’s resource-heavy index benefited from strong oil and metals.
- The TSX remains highly correlated with global markets, amplifying moves.
So, is there a “Carney effect”?
There is a positive correlation between Carney’s first months in office and the TSX’s rally. But causation is harder to prove. A balanced assessment is that Carney’s credibility bolstered confidence, while monetary policy and global conditions did the heavy lifting.
Why this matters
Markets and politics interact through expectations. A strong index gives Carney political capital, but sustaining momentum will depend on factors beyond Ottawa — commodity prices, U.S. markets, and future Bank of Canada moves.
Sources and notes
- Bank of Canada interest rate announcement, Sept 17, 2025.
- TMX monthly stats for March 2025 — closing reference.
- TradingEconomics and Investing.com — current TSX levels.
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