Central Banks
Canada’s Profligate Spending Forced Interest Rates Higher, Scotiabank Says
- Economists see 200 basis points of tightening due to spending
- BoC has asked officials to factor inflation into fiscal policy
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Monetary policy in Canada wouldn’t be as restrictive if elected officials had restrained their spending in recent years, according to economists at the Bank of Nova Scotia.
Roughly 200 basis points of interest rate tightening stems from the combined program spending and consumption by Canada’s federal and provincial governments since the pandemic, Scotiabank economists Jean-François Perrault and Rene Lalonde wrote in a report to investors.