Annual inflation peaked at 8.1 per cent in June 2022, well above the bank’s 2 per cent target.
Even after inflation is brought to heel, Canadians should not expect interest rates to return to pre-pandemic levels.
Rising interest rates will put additional pressure on federal finances.
Central Bank Forays Into Unconventional Monetary Policies: Explanation, Assessment, and Implications
By 2028, the federal government will add a projected $131.8 billion in debt.
Ottawa is spending nearly one-third more than it was in 2019 before the pandemic.
Government borrowing crowds out private investment and lowers the economy’s productive potential.
With interest rates rising, it's all the more important for governments to carefully manage money.
Federal debt interest will cost a projected $42.9 billion in 2026/27.