Federal government’s failure to restrain spending undermines Bank of Canada’s effort to tame inflation
“Monetary policy and fiscal policy must work together to reduce inflation—a lesson the current federal government seems slow to learn,” Cross said.
By Fraser Institute —— Bio and Archives--April 6, 2023
Canadian News, Opinion | Comments | Back To Full Article
MEDIA CONTACT: Mark Hasiuk, (604) 688-0221 ext. 517, mark.hasiuk@fraserinstitute.org
VANCOUVER—The federal government’s decision to increase already high levels of spending and continued budget deficits will hinder the Bank of Canada’s efforts to tame inflation, finds a new study released today by the Fraser Institute, an independent, non-partisan, Canadian public policy think-tank.
“Until the federal government shows some spending restraint, Canadians may continue to face higher prices for good and services,” said Philip Cross, former chief economic analyst at Statistics Canada, senior fellow at the Fraser Institute and author of Canada’s Fiscal Policy Has Undermined Efforts to Tackle Inflation.
During the COVID lockdowns in 2020, the federal government, which was already spending at record-high levels (as measured by per-person spending adjusted for inflation), further increased spending while the Bank of Canada lowered interest rates to near zero.
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