At its last interest rate setting on March 8, the Bank of Canada paused its months-long hiking campaign and left unchanged its target for the overnight interest rate at 4.5 per cent. Being on the fence can be uncomfortable in the current inflationary environment – but for the latest rate setting on Wednesday, the bank was right to remain there.
Perching on the fence is uncomfortable for many reasons. First is the long lag time between setting interest rates and seeing the result. It can take 18 months or more for changes in interest rates to affect economic activity and then inflation. The bank’s rate hikes over the past year are moving inflation in the right direction. The year-over-year rate of…
The 2023 federal budget rests its case for fiscal discipline, even restraint, on promised savings in operating expenses that amount to billions of dollars. Key passages from this part of the budget include:
“Budget 2023 proposes to reduce spending on consulting, other professional services, and travel by roughly 15 per cent of planned 2023-24 discretionary spending in these areas.” “Budget 2023 proposes to phase in a roughly three per cent reduction of eligible spending by departments and agencies by 2026-27.” “Budget 2023 announces the introduction of cross-government program effectiveness reviews, to be led by the President of the Treasury Board. The first review will examine skills training and youth programming, to…A major theme in the run-up to Finance Minister Chrystia Freeland’s budget was the government’s commitment to prudence. Prudence was also a major theme in the run-up to last year’s budget. In both years, however, the run-up proved misleading. Last year’s budget hiked projections for spending and borrowing. This year’s also involves much higher future spending and borrowing than the run-up led us to expect, ruling out the 2027-28 return to surplus promised last year.
Because the fiscal plan buries the key numbers under hundreds of pages of political messaging and re-hashed material, it takes some digging to discover just how much the budget repeats the imprudence of its predecessors. What the digging reveals is that lower-than-…
