Canada’s liberal government kept immigration targets unchanged for the next two years and said it would stop ramping up immigration from 2026 onwards, as the country grapples with high inflation and a housing crisis.

Canada is targeting 465,000 new residents this year, 485,000 in 2024 before hitting 500,000 in 2025 - a level it aims to maintain in 2026, Immigration Minister Marc Miller told reporters in Ottawa.

“These immigration levels will help set the pace of Canada’s economic and population growth while moderating its impact on critical systems such as infrastructure and housing,” Miller said.

Royal Bank of Canada (RY.TO) said while the pause in targeted immigration levels was appropriate given housing challenges and eroding public support, Canada would need immigrants in the long term.

The annual immigrant intake of 1.3% of the population was not sufficient to stabilize the age structure of the population, which would require immigration of about 2.1%, the country’s top lender said in a report.

Canada’s population has grown mainly through immigration, and population growth has helped fuel economic growth in recent years.

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Some economists have blamed immigration for worsening the country’s housing shortage, even though some immigrants also work in industries like construction that are facing a labor shortage.

For this reason, the Bank of Canada has said immigration has been both a driver and a brake for inflation, which stood at 3.8% in September.

More consumers mean more demand, which pushes up prices, but immigrants entering the work force also help keep down labor costs.

A strong inflow of immigrants helped Canada’s population to grow last year at its fastest pace since 1957, placing it among top 20 fastest growing countries in the world, Statistics Canada said, in part offsetting the effects of aging residents who are retiring and adding to healthcare costs.

An increasing number of newcomers to Canada have in recent years opted to leave, posing a challenge to a country heavily dependent on immigration for population and economic expansion, the Institute for Canadian Citizenship said earlier this week.