Crushing interest rates will punish the Canadian economy and stifle economic growth, the Senate Committee on Banking, Commerce and the Economy said in its recent “The State of the Canadian Economy and Inflation” report.
“Our report offers a range of views from the people who live and study these issues every day. It is a timely and solid foundation for policymakers as our economy continues to grapple with the post-COVID recovery,” says Senator Pamela Wallin, Chair of the committee.
Between September and December 2022, the committee heard testimony from a wide range of prominent economists and other experts to assess the state of Canada’s economy and provide a range of policy options to inform public debate on how federal institutions should react to high inflation and a grim economic outlook.
While witnesses expressed a considerable diversity of opinion, several points of consensus emerged. For example, there was agreement that inflation is now largely driven by domestic factors and that public spending should be constrained and more targeted.
Committee members also considered the Bank of Canada’s economic interventions; the committee believes the bank should be more transparent and periodically make public its assessment of the effect of its interventions.
“Inflation is hurting Canadians. Understanding how we’ve gotten here — and what federal actors could have done differently — is an important exercise in accountability. There is clear evidence that federal spending must be reduced to avoid making the current situation worse,” says Senator Elizabeth Marshall, member of the committee.
Read the full report.