2 Percent of Interest Rate Increase Due to Government Spending: Scotiabank Report

Government spending is to blame for at least 2 percent of the 4.75 percent hike in interest rates that Canadians have seen over the past few years, according to a Scotiabank analysis. “To Spend or Not to Spend? That is the Monetary Question” looks at the high rate of spending at all levels of government as well as the financial support the federal government offered throughout the pandemic. “Rising government consumption and the pandemic transfers account for roughly 200 basis points of the 475 basis points increase in the Bank of Canada’s policy rate,” the report says. A basis point is the unit of measurement for interest rates, with one basis point equal to 0.01 percent....