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MNI BRIEF: Freeland Will Avoid Adding To BOC Inflation Fight


Canadian Finance Minister Chrystia Freeland Wednesday pledged to ensure targeted fiscal support that avoids undermining the central bank’s efforts to suppress inflation, in some of her starkest comments yet about growing recession risks.

“Our economy will slow as the central bank continues to step in to tackle inflation,” she said in a speech to the Automotive Parts Manufacturers’ Association. The BOC is seen hiking at least another 50bp on Oct. 26, with several economists shifting calls to 75bps after faster-than-expected September inflation of 6.9%. Canadian two-year bond yields have climbed to 4.15% from 0.8% over the past year as the BOC hiked 300bps.

“There will be people whose mortgage payments will rise. Business will no longer be booming in the same way it has been since we left our homes after the Covid lockdowns. Our unemployment rate will no longer be at its record low,” Freeland said.

The minister mentioned pending or existing programs aiding the poor such as an expanded rebate on federal sales tax, and no major new fiscal moves. “It will not pour unnecessary fuel on the flames of inflation,” she said, adding support can't return to broad programs deployed during Covid lockdowns. “To do so would only make inflation worse, and would force the Bank of Canada to raise interest rates even higher.”

“We will get through the economic slowdown that is coming for Canada and the world,” she said. The Bank will keep hiking even if there's a recession, an advisor has told MNI. (See: MNI INTERVIEW: BOC To Follow Through Even If Recession- Tombe)

MNI Ottawa Bureau | +1 613-314-9647 |
MNI Ottawa Bureau | +1 613-314-9647 |

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