Lower Government Spending Would Decrease Inflation Faster, Bank of Canada Governor Says

The governor of the Bank of Canada says the country’s inflation rate would drop more quickly if future government spending was lower. Tiff Macklem made the comment in a Feb. 1 session of the House of Commons Standing Committee on Finance. “If government spending turns out to be slower than we expected, yes, there’ll be less demand pressures from government, and that means growth will probably be lower, the unemployment rate will be a bit higher, and inflation will come down a bit sooner,” said Mr. Macklem, responding to a question from Conservative MP Marty Morantz. The session, part of the committee’s ongoing discussions on the Bank of Canada’s monetary policy report, provided insight into the central bank’s strategy to combat inflation while acknowledging current economic challenges....