MNI BRIEF: Carney Says Tight Fiscal Stance Right For Canada

Former BOE and BOC Governor Mark Carney said Thursday the market response to last month’s UK budget sends a warning about the dangers of uncoordinated policy action as global recession becomes probable, though Canada has taken a more appropriate stance of tighter fiscal policy alongside aggressive interest-rate hikes.

Governments can no longer count on low-for-long interest rates, Carney told the Canadian Senate's banking committee. He welcomed a more recent move to tighter Canadian fiscal policy, though he said that Covid supports went on a bit too long and added to inflation pressure. "Borrowing costs are going to be higher in my judgement, higher not just in the short term but in the medium term," he said, so "fiscal discipline is imperative."

“Recession is both likely globally" and "probable in Canada,” Carney said.