Is Trudeau to blame?

Is Trudeau to blame?

DAY

Apart from the oil shock, the housing boom, the sharp rise in the food basket, the strong demand from the United States, which would also be responsible for the sharp rise in interest rates. interest in countering major inflationary pressures?  

It would be the federal government of Justin Trudeau! Because of what ? Because of the generous financial assistance programs it has put in place to assist victims of the COVID-19 pandemic.  

Not me saying this , it is the Bank of Canada which bluntly suggests this in its July 2022 Monetary Policy Report, tabled yesterday, following the sharp increase in its key rate by one percentage point.  < /p>

From 0.25% at the start of the year, the Bank of Canada's key rate is now 2.50%. This dramatic increase of 2.25 percentage points obviously rippled through all interest rate structures, hitting mortgages, personal loans, credit cards, business loans, and more.   

TOO STRONG RECOVERY 

What does the Bank of Canada concretely reproach the Trudeau government for? To be ultimately responsible for the “faster-than-expected recovery in Canada”, which is in the eyes of the Bank of Canada a source of error. 

“The monetary and fiscal measures implemented in response to the pandemic have had greater effects than initially expected,” says the Bank of Canada. Instead of deteriorating, household disposable income and consumer confidence have improved.  

“The inability to obtain services in person has also boosted the savings of some households. These factors contributed to stronger than expected demand for goods. »

Strong accumulation of savings and low mortgage rates stimulated the housing market to the point where house prices exploded.  

Is Trudeau to blame?

Is Trudeau to blame?

PERVERSE EFFECTS  

In my column of last Thursday, June 30 “The perverse effects of Trudeau's money”, I mentioned that in 2020, the federal government had finally paid the victims of the pandemic more money than the amount of losses suffered due to the paralysis of several economic sectors. 

While government assistance (mostly federal) to serve as financial compensation reached a median amount of $8,200 per household, the median income lost due to work stoppages was only $1,900, according to Statistics Canada. &nbsp ;

Among the generous financial measures put forward by Justin Trudeau, here is the additional financial assistance he notably paid to Canadian households during the first year of the COVID-19 pandemic . 

  • Employment Insurance benefits: $41.7 billion 
  • Canada Emergency Response Benefit: $56.2 billion 
  • Emergency wage subsidy: $75 billion 
  • Seniors' benefits: 2.5 billion $ 
  • Child benefits: $2.4 billion 

The final word: after maintaining its key rate at 0.25%, the Bank of Canada is also responsible for the inflationary pressures that followed. 

Trudeau est-il agrave; to blame?