Government Spending Hindering Bank of Canada Efforts to Lower Inflation: Governor

BoC governor Tiff Macklem says it would be easier to get inflation down if monetary and fiscal policy were ‘rowing in the same direction.’

Bank of Canada Governor Tiff Macklem holds a press conference in Ottawa on April 12, 2023. The Canadian Press/Sean Kilpatrick

Attempts by the Bank of Canada (BoC) to tame inflation by raising interest rates have been hampered by the increased spending from all levels of government, says BoC governor Tiff Macklem.

“If all those spending plans are realized, government spending will be adding to demand more than supply is growing. And in an environment where we’re trying to moderate spending and get inflation down, that’s not helpful,” Mr. Macklem said during an interest rate announcement on Oct. 25.