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Trudeau’s Red Ink Could Put Bank of Canada in Bind, BMO Says

Bank of Canada Governor Stephen Poloz and his top deputy, Carolyn Wilkins, speak in Ottawa  on Oct. 30, 2019.

Bank of Canada Governor Stephen Poloz and his top deputy, Carolyn Wilkins, speak in Ottawa  on Oct. 30, 2019.

Photographer: David Kawai/Bloomberg
Updated on

Prime Minister Justin Trudeau’s fiscal update Monday was so stained with red ink that it may increase pressure on the Bank of Canada to act in the event of a downturn, according to Doug Porter, chief economist at Bank of Montreal.

The projections from Finance Minister Bill Morneau show the nation is on track to run a C$26.6 billion ($20.2 billion) deficit this year and a C$28.1 billion gap in 2020, higher than what was outlined in the spring budget. Morneau said lower interest rates forced the government to revalue what it needs to put aside for future pension obligations -- adding about C$28 billion in government expenses over five years.