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Economics

Trudeau Is Shirking Canada’s Inflation Fight, Scotiabank Says

  • Elevated spending puts the inflation burden on central bank
  • Fiscal pullback would allow BOC to stop hiking sooner: Scotia
Tiff Macklem listens to Chrystia Freeland during a news conference in Ottawa on Dec. 13, 2021.
Tiff Macklem listens to Chrystia Freeland during a news conference in Ottawa on Dec. 13, 2021.Photographer: David Kawai/Bloomberg

One of Canada’s largest commercial banks fired a broadside at Prime Minister Justin Trudeau’s government, warning that high levels of federal spending are hurting the fight against inflation.

Economists at Bank of Nova Scotia, in a report to investors published Sunday evening, said that aggressive interest rate increases launched by Bank of Canada Governor Tiff Macklem will unduly punish businesses, given still-elevated levels of fiscal stimulus.