Op-Eds
Une euphorie postpandémique s’empare de nos politiciens en campagne électorale. On aimerait y croire, mais les baisses d’impôt promises par la Coalition avenir Québec (CAQ) et les libéraux posent problème.
Ces annonces plairont au plus grand nombre, mais elles aggraveront l’inflation, que ces partis veulent pourtant soulager. Que vaudra une réduction d’impôt, si elle entraîne des paiements hypothécaires plus élevés ?
Ce n’est pas le moment de stimuler une économie en surchauffe, alors que la Banque du Canada hausse les taux d’intérêt pour calmer le jeu.
Cette générosité soudaine provient d’une lecture avec des lunettes roses du Rapport préélectoral sur l’état des finances publiques du Québec.…
“Build back better!” We have heard that a lot since COVID hit — mainly from advocates for government spending, who saw pandemic-related fiscal stimulus, financed by central bank bond purchases, as suddenly making things that had seemed out of reach affordable.
The 2022 federal budget highlights their success. Ottawa’s last pre-COVID projections, in its 2019 fall update, showed federal spending at $421 billion in fiscal year 2024-25. The 2022 budget’s projections have it at $479 billion a year (adding back $2 billion in pension obligations the government stopped including meanwhile). That’s $58 billion more, long after COVID-related measures are gone. The slogan we should have been hearing is “Build back bigger!”
In 2019, a…
With inflation on the rise, the Bank of Canada kicked its tightening cycle into high gear Wednesday by announcing a 50-basis-point increase in its target for the overnight rate — the first non-25-basis-point hike in over 20 years. It also modified its stance concerning its over-sized holdings of Government of Canada bonds, which swelled its balance sheet during so-called Quantitative Easing (QE). Those days are over: it will now initiate Quantitative Tightening, or QT, by not replacing bonds on its balance sheet as they mature, thus reducing its bond holdings over time.
Some might be disappointed the bank didn’t go further on QT by announcing it would actually start selling its holdings of government bonds. Not to worry.…
What explains surging inflation in Canada and many other advanced economies? Most commentators — correctly — blame loose monetary policy. That contrasts with the 1970s and 1980s, when many people argued inflation was not something central banks could control and that tight money was therefore a case of pain for no gain. With the Bank of Canada and other central banks beginning to tighten, those arguments may return. If they prevail, monetary policy will stay too loose and inflation will keep raging.
Inflation is another term for a persistent decline in the value of money, which like most values is determined by supply and demand. If the Bank of Canada promotes growth in the supply of Canadian dollars that exceeds growth in the…
The budget that federal Finance Minister Chrystia Freeland will present shortly will reveal whether the government is serious about putting the national finances on to a sustainable track.
There is room for doubt. Since 2015, the government had been running deficits larger than it promised, and larger than a strong economy justified. Then it responded to the COVID-19 pandemic with debt-financed spending on an unprecedented scale.
To assuage concerns about soaring federal debt – concerns heightened by the government’s equally unprecedented failure to present a budget at all in 2020 – the Finance Minister introduced a new concept in the government’s fall economic statement that year: fiscal…
