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Governments Shunting ‘Dirty Work’ on Inflation to Bank of Canada, CIBC Says

CIBC warns that the Bank of Canada will have to keep rates higher for longer unless governments do more to dial back their spending. Cutting back further on state largesse would help to cool demand.

1 min read
  • Bank of Canada must keep rates higher for longer unless governments cut spending, says CIBC.
  • Lower federal fiscal spending is dragging on growth as Covid-19 programs expire.
  • Additional fiscal tightening may mean interest rates start to fall earlier, relieving some pain for households.
  • Nearly 70% of respondents to a Bloomberg survey say generous federal spending programs led to steeper interest rates.
  • Economists argue that cutting back further on state largesse would help to cool demand.
Governments Shunting ‘Dirty Work’ on Inflation to Bank of Canada, CIBC Says
The Bank of Canada will have to keep rates higher for longer unless governments do more to dial back their spending, one of the country’s largest commercial lenders warned.
BloombergErik Hertzberg

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