Fiscal policy may complicate fight against inflation, says Macklem
Bank of Canada governor warns projected spending may ‘not be helpful’ for monetary policy
Bank of Canada governor Tiff Macklem has warned fiscal and monetary policy are working at cross-purposes.
“It would be helpful if monetary and fiscal policy was rowing in the same direction,” Macklem told a parliamentary committee on October 30.
Macklem said Canadian federal and provincial government spending would grow approximately 2.5%, which would be greater than growth in supply of 2%, and thus inflationary. “That would not be helpful in getting inflation down to target,” he said.
He
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