Published On: Tue, Mar 13th, 2018

Federal government spending has lifted economy, helped slow household debt, Bank of Canada head says

OTTAWA—The governor of the Bank of Canada says the federal government’s steps in the last couple of years to take on more public debt has helped prevent an even faster buildup of household debt that has still managed to climb to historic highs.

Stephen Poloz says Ottawa’s recent spending on programs, such as enhanced child benefits and infrastructure, have lifted the economy and pushed interest rates to a level higher than they would have been without government stimulus.

He says the higher rates have helped keep the accumulation of household debt lower than it otherwise would have been had Canada continued with government belt-tightening approaches of the past.

Poloz made the comments Tuesday as he responded to questions following a speech at Queen’s University in Kingston, Ont.

His remarks come a couple of weeks after the Trudeau government tabled a federal budget that has faced criticism for its plan to continue running annual multibillion-dollar deficits across the five-year projection horizon — despite the country’s surprisingly strong economic performance.

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TORONTO STAR

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Federal government spending has lifted economy, helped slow household debt, Bank of Canada head says