Newspaper article The Canadian Press

Central Bank to Assess Economic Impact of Feds' Multibillion-Dollar Commitments

Newspaper article The Canadian Press

Central Bank to Assess Economic Impact of Feds' Multibillion-Dollar Commitments

Article excerpt

Central bank to assess Ottawa's vows

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OTTAWA - The Bank of Canada is scheduled to deliver an eagerly awaited assessment Wednesday: its take on just how much of a lift it expects the economy to get from billions in federal government spending commitments.

The analysis will be released as part of the central bank's quarterly update to its economic projections. The report will also coincide with the bank's latest announcement on its benchmark interest rate.

It will be the Bank of Canada's first monetary policy report since the Liberal government tabled its March 22 budget, which contained billions of dollars worth of spending measures and tax relief.

To help fund the plan, the budget projected five-straight annual deficits totalling more than $110 billion, starting with a $29.4-billion shortfall in 2016-17.

The Finance Department estimated the Liberal budget, which includes measures to boost infrastructure investments and tax relief for middle- and low-income households, will generate economic growth of 0.5 per cent this year and one per cent in 2017-18.

The document also predicted the measures to create or maintain 143,000 jobs over the next two years.

But some experts, including the federal budget watchdog, have called those numbers a little optimistic.

A report last week by the parliamentary budget office said the measures are more likely to create or maintain 86,000 jobs over the next two years, while boosting growth by 0.5 per cent this year and 0.8 per cent in 2017-18.

The last time the Bank of Canada updated its economic forecasts was in January, when the economy appeared to be in weaker shape.

At the time, it downgraded its 2016 growth projection to 1.4 per cent from its fall forecast of two per cent and predicted the economy to expand by 2.4 per cent in 2017.

On that day, which also featured an interest rate announcement, governor Stephen Poloz said senior bank officials had considered making another cut to the already-low rate of 0.5 per cent to help the economy.

But Poloz said the eventual decision to stand pat came after they mulled over what he considered a key factor: the Liberal vow to inject billions into infrastructure projects. …

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