Reining in government spending could help the Bank of Canada fight surging inflation, lower interest rates, and shift the burden of adjustment away from the private sector and split it more equitably between the public and private sectors, says the Scotiabank.
In the report released June 19, Scotiabank’s chief economist Jean-François Perrault and modelling director Réne Lalonde said the central bank is shouldering the entire burden of curbing high inflation alone, even though inflation is largely induced by the government’s fiscal policies aimed at protecting economies from the COVID-19 pandemic, setbacks from the Russian-Ukraine war, among other inflation drivers….