(OTTAWA) Finance Minister Chrystia Freeland says the Canadian economy is resilient enough to absorb the Bank of Canada’s most recent interest rate hike without falling into recession.
In the process, she said she was worried about the effect that this new increase will have on Canadian families, who are struggling to make ends meet due to inflation and who must now deal with the highest interest rates. high of the last 20 years.
Testifying before the Standing Senate Committee on National Finance, the Minister pointed out that Canada has posted the highest growth rate of the G7 countries since the beginning of the year and that the job market continues to surprise despite the increases changes in the Bank of Canada’s policy rate over the past 12 months to control inflation. The unemployment rate remains historically low, at around 5%, while there are now 900,000 more jobs than before the COVID-19 pandemic, she listed.
But some economists believe that a recession is looming over the country due to the unprecedented tightening of monetary policy.
Ms. Freeland came to explain to the Senate committee the main measures of her latest budget. The committee is studying Bill C-47, which aims to implement the budget.
Previously, the minister was forced to defend the Trudeau government’s budget choices over the past few years – the Liberals have never presented a balanced budget since taking office in 2015 – following insistent questions from Conservative Senator Elizabeth Marshall.
“You’ve lost control of spending,” the senator told him, picking up a line of attack from Conservative leader Pierre Poilievre in the House of Commons.
“Canada finds itself in a very responsible fiscal position,” Ms. Freeland countered, noting that rating agencies maintained Canada’s AAA rating following the tabling of the last federal budget. “Canada today has the lowest deficit of any G7 country and the lowest debt-to-GDP ratio,” the Minister said.
Commenting earlier in the day on the Bank of Canada’s decision to raise the policy rate, Ms. Freeland said she took note and reiterated that the Bank of Canada conducts an independent monetary policy. However, she expressed concern about the impact of this ninth increase in the key rate on the ability of Canadian families to pay.
“There are always two issues that create real challenges for Canadians. On the one hand, there is inflation. On the other hand, there are high interest rates. I have absolute confidence in the fact that inflation is decreasing and that we will reach a stable and normal level of inflation,” the minister told reporters. She echoed the Bank of Canada’s projections that the inflation rate should stand at 3% by the end of the summer.
Ms. Freeland made the remarks on the same day that Conservative Party leader Pierre Poilievre promised to speak non-stop in the House of Commons beginning Wednesday evening to prevent the passage of Bill C-47 to implement the budget.
He thus kicked off the parliamentary guerrilla war promised by his party as long as the Trudeau government does not present a plan to return to balanced budgets.
According to the Conservative leader, the latest budget is bad for Canadian families because it fuels inflation due to the high spending it foresees.
“Today I will rise in the House of Commons for the budget debate and I will continue to talk and talk and talk non-stop to stop this budget from passing,” the Conservative leader announced during a speech to his deputies which was open to the media.
Poilievre said Canada is on the brink of a financial crisis due to the country’s sharply rising interest rates at a time when Canadians are carrying sky-high mortgage debt.