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Amid the economic turmoil of the pandemic, his government racked up Canada's highest ever deficit. Failing to curb spending now risks "the market dictating to you what you have to do with fiscal policy," said Doug Porter, chief economist at BMO Capital Markets. "I do think they have to trim the sails a bit," he added. "It's going to be easier to get inflation down if monetary and fiscal policy are rowing in the same direction," Macklem said. Fitch Ratings stripped Canada of its triple-A credit rating in June 2020, citing pandemic spending.

Persons: Justin Trudeau, Doug Porter, Chrystia Freeland, Katherine Cuplinskas, Trudeau, Macklem, Desjardins, Randall Bartlett, Simon Deeley, Robert Asselin, DBRS Morningstar, Julia Smith, Steve Scherer, Fergal Smith, Denny Thomas, Josie Kao Organizations: OTTAWA, Trudeau's Liberal, BMO Capital Markets, Finance, International Monetary Fund, of Canada's, BoC, UK, RBC Dominion Securities Inc, New, Business Council of Canada, Fitch, Moody's Investors, Canada, Thomson Locations: Canada, FES, Germany, High, Ottawa, Toronto

☆ BoC likely done raising rates, to cut by mid-2024 say economists: Reuters poll
▼ + stars: | 2023-10-20 | by ( Milounee Purohit | ) www.reuters.com time to read: +4 min

The risk of a revival in inflation, last measured at 3.8%, has led most to forecast now is not the time for the central bank to strongly signal they are done raising rates. Twenty-nine of 32 economists polled Oct. 13-20 expect no change to the central bank's 5.00% overnight rate (CABOCR=ECI), with the remaining three expecting a 25 basis point hike. While most are confident the central bank is done hiking, a significant minority of economists who answered an additional question, 8 of 18, said the risk of the BoC raising rates at least once more is "high". Still, a two-thirds majority, 20 of 30, see the BoC cutting its overnight rate at least once before end-June 2024. The distribution of where economists saw the overnight rate by end-June was split many ways.

Persons: Randall Bartlett, underscoring, Tony Stillo, Milounee Purohit, Maneesh Kumar, Ross Finley, Jonathan Oatis Organizations: Bank of Canada, BoC, Desjardins, U.S . Federal Reserve, Oxford Economics, Bank, Thomson Locations: BENGALURU, Canada

☆ Explainer: Why is the Canadian economy strong despite record pace of rate hikes?
▼ + stars: | 2023-06-12 | by ( Steve Scherer | ) www.reuters.com time to read: +3 min

Analysts are betting on another rate hike in July, to help the Bank of Canada bring inflation back down to its 2% range. Here are some factors that are keeping demand robust in the Canadian economy. The savings rate has halved to 2.9% in the first quarter from the fourth quarter of last year, Statistics Canada said. The central bank says the fiscal spending is not adding to inflation, but it is not helping bring it down either. ($1 = 1.3347 Canadian dollars)Reporting by Steve Scherer; Additional reporting by Nivedita Balu in Toronto; Editing by Paul SimaoOur Standards: The Thomson Reuters Trust Principles.

Persons: Randall Bartlett, Bartlett, Steve Scherer, Nivedita Balu, Paul Simao Organizations: OTTAWA, Bank of Canada, Desjardins, Statistics, Thomson Locations: Canadian, Statistics Canada, Provinces, Toronto

While a federal election is not due until 2025, housing affordability is among the top concerns for Canadians who have grappled with supply shortages. The Liberal Party government's ambitious plan to welcome 500,000 immigrants per year by 2025, or about 1.25% of its population, is expected to fuel robust demand for housing. In April 2022, the Liberal government announced plans to double housing construction over the next decade. It's been 8 years (since he took power), and now, housing costs have doubled," Poilievre said on Twitter earlier this month. Speaking with the heads of Canada's municipalities last week, Trudeau said the government's next "long term infrastructure" plan will be revealed this autumn.

Persons: Justin Trudeau, Randall Bartlett, Bartlett, Pierre Poilievre, Trudeau, Poilievre, Darrell Bricker, they're, Bricker, James Laird, Laird, Fergal Smith, Steve Scherer, Marguerita Choy Organizations: TORONTO, Bank of Canada, Liberal Party, Desjardins, Liberal, Housing, Canada Mortgage, Housing Corporation, Canadian Home Builders ' Association, Reuters, Conservative Party, Twitter, Toronto Area, Public Affairs, Thomson Locations: Toronto, Ottawa

☆ Reactions: Canada 2023/24 budget deficit to jump, Ottawa to boost spending
▼ + stars: | 2023-03-28 | by ( ) www.reuters.com time to read: +7 min

JULES BOUDREAU, SENIOR ECONOMIST, MACKENZIE INVESTMENTS"The surprise was more on the revenue side more than the spending side. Prior to this budget we were not eligible for the carbon capture utilization and storage (CCUS) investment tax credit, but they have now broadened the eligibility parameters." "The big open question, heading into this budget was how was Canada going to react to the Inflation Reduction Act ... MARK ZACHARIAS, EXECUTIVE DIRECTOR OF CLEAN ENERGY CANADA"We thought today's budget was generally excellent and it sets Canada on a path for prosperity. "The investment tax credits for clean tech manufacturing positions Canada as a leader, particularly in zero-emissions vehicles."

☆ Canada to ramp up clean-tech push in budget to level playing field with US
▼ + stars: | 2023-03-28 | by ( Steve Scherer | ) www.reuters.com time to read: +4 min

In Canada, there's more pressure to step up green investments to level the playing field with the United States, which passed a series of massive incentives in the Inflation Reduction Act (IRA) last year. Last week Freeland said Canada is at a "crucial crossroads" for the green transition and that it would be "reckless" not to make major investments in clean tech. But she has also said she does not want to fuel inflation and slowing growth means fiscal responsibility is warranted. The budget will also include an increase in federal healthcare spending promised earlier this year to the provinces, which administer the public health system. Reporting by Steve Scherer; Editing by Andrea Ricci and Chizu NomiyamaOur Standards: The Thomson Reuters Trust Principles.

☆ Canada has firepower to invest billions in green transition, analysts say
▼ + stars: | 2023-02-24 | by ( Steve Scherer | ) www.reuters.com time to read: +4 min

OTTAWA, Feb 24 (Reuters) - Canada has the firepower to invest billions of dollars in the green transition over the coming years to make it more competitive with the United States, analysts said, while also ensuring its public finances stay on a sustainable path. Because nominal growth is forecast to be weak in the 2023/24 fiscal year, the ratio might creep up before heading downward again. Many in industry say Canada must do more to be a key player in the green transition as the IRA is already spurring investment in the United States. Bartlett estimates Canada could spend an additional C$20 billion ($14.9 billion) per year and keep the net debt-to-GDP ratio below 2021/22's 45.5%, which was the lowest in the G7. Promised investments in the green transition will not "be overly inflationary" and they would provide certainty for investors and businesses, Bartlett said.

☆ VIEW Canada cuts 2023 GDP forecast but says economy to avoid recession
▼ + stars: | 2022-11-03 | by ( ) www.reuters.com time to read: +3 min

TORONTO, Nov 3 (Reuters) - Canadian Finance Minister Chrystia Freeland on Thursday unveiled an economic update, slashing 2023 real GDP forecast to 0.7%, but said the economy would avoid a recession, while announcing C$11.3 billion ($8.2 billion) in new spending this fiscal year and next. The so-called Fall Economic Statement also proposes a refundable tax credits for clean technologies, a 2% tax on share buybacks, among others. STORIES: read more read moreLINK:https://budget.gc.ca/fes-eea/2022/report-rapport/FES-EEA-2022-en.pdfCOMMENTSRANDALL BARTLETT, SENIOR DIRECTOR OF CANADIAN ECONOMICS AT DESJARDINS"As expected - big windfall to revenues coming from higher inflation and a stronger economy, tighter labour market." We know that once you add in provinces we're up closer to C$23 billion (in affordability measures)." Reporting by Fergal Smith, Ismail Shakil Editing by Denny ThomasOur Standards: The Thomson Reuters Trust Principles.

OTTAWA, Nov 3 (Reuters) - Canada's government will outline its new fiscal forecasts and update its spending plans on Thursday against the backdrop of a stalling economy brought on by a steep rise in interest rates. The financial market turmoil caused by Britain's now-abandoned tax-cut plan, still-high inflation and rising interest rates are reasons for Canada to be very cautious about adding stimulus, analysts said last month. The Liberal government's updated fiscal plans come as the economy is sinking into three quarters of near-zero growth, according to Bank of Canada forecasts, and as the central bank continues its historic tightening campaign. Inflation in Canada has slowed to 6.9% in September from a peak of 8.1% earlier in the year, but core measures remain sticky. "Policy risk is particularly elevated with still-high inflation and an uncertain interest rate path that has markets on edge," said Rebekah Young, an economist at Scotiabank.

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