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Economic Viewpoint

Despite the increase in public investment, monetary policy can still be solicited in Canada

February 16, 2017
François Dupuis, Vice-President and Chief Economist • Jimmy Jean, Senior Economist

Last year, the shift from a rather restrictive to an expansionary fiscal policy in Canada has been acclaimed, both domestically and internationally. The federal government will soon table its budget for the fiscal year 2017–2018, and the tangible effects from the measures announced in 2016 are slow to emerge, particularly with respect to infrastructure. At the same time, there is a shift in the Bank of Canada’s (BoC) rhetoric on the importance of fiscal policy. In particular, it refuted the idea that fiscal policy had taken over from monetary policy. This Economic Viewpoint provides a portrait of this situation. Our observation is that while it is true that the budget announcements allowed the BoC to be patient in 2016, it does not imply that it has been confined to a spectator role.