Canada inflation: Freeland touts previously announced measures to combat rising cost of living

Amid stubbornly hot inflation and rising interest rates, Finance Minister Chrystia Freeland detailed financial commitments to “help make life more affordable for millions of Canadians” — but the measures were all previously announced.

Freeland delivered a keynote address about the state of the Canadian economy at the Empire Club of Canada in downtown Toronto on Thursday afternoon.

In her speech, Freeland highlighted the federal government’s “Affordability Plan,” which she referred to as a suite of measures totalling $8.9 billion in new support for Canadians in 2022.

The measures were all included the past two federal budgets and are now taking effect.

Freeland called recent skyrocketing inflation a “global phenomenon” that is being driven by lasting impacts of the COVID-19 pandemic, ongoing lockdowns in China, and Russia’s invasion of Ukraine.

Though no new measures have been announced, Craig Wright, chief economist with RBC, tells CityNews that actually may be the best approach.

“The primary role for cooling off any inflation … falls to the Bank of Canada rather than the minister of finance, and I think in terms of what the minister of finance can do, sometimes doing nothing is the right thing to do,” he explained.

“Overall, I think … managing inflation, the cycle, should be left to the Bank of Canada.”

Wright says the central bank will keep raising interest rates to cool off inflation, but admits it’s going to get worse before it gets better, which may not happen until late this year or early next.

“It’s probably prudent for the minister to keep the powder dry in case the economy takes a turn for the worst as we get through next year,” he added.

The Bank of Canada most recently raised its key rate by a half a percentage point — the second time in the past few months — bringing it to 1.5 per cent in June.

Bank of Canada Governor Tiff Macklem has hinted he is prepared to act “more forcefully” if high inflation persists.

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The U.S. Federal Reserve hiked its key interest rate by three-quarters of a percentage point on Wednesday — its largest hike since 1994, leading economists to predict the Bank of Canada will follow suit next month.

Meanwhile, the opposition has been demanding more action from the federal government. The Conservatives have called for tax cuts, while the NDP wants major corporations to be taxed more, with the cash redistributed to those who need it.

-With files from The Canadian Press