Evidence of meeting #12 for Finance in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was economy.
A video is available from Parliament.
Conservative
Greg McLean Conservative Calgary Centre, AB
Inflation would include some of the losses, some of the heavy debts that the government is incurring, for Canadians.
Governor, Bank of Canada
Inflation is the year-over-year change in the consumer price index.
Conservative
Greg McLean Conservative Calgary Centre, AB
I understand what inflation is, but would you say that annual deficits and mounting debts contribute to inflation?
Governor, Bank of Canada
I'm not sure I really understand the question. I mean, inflation is 2.4%.
Conservative
Greg McLean Conservative Calgary Centre, AB
Do annual deficits and mounting debts contribute to inflation?
Governor, Bank of Canada
If the economy is overheated and the government runs a big deficit, yes, it's going to—
Conservative
Liberal
Liberal
Ryan Turnbull Liberal Whitby, ON
I'm going to give my time to Mr. Sawatzky, but just before I do, I want to say thank you again for appearing. I appreciate your ability to answer our questions, and I look forward to seeing your future reports, which I know will account for many of the fiscal policies and measures that are in the federal budget. I look forward to having you back sometime in the future.
I will now hand it over to Mr. Sawatzky for a couple of questions.
Liberal
Jake Sawatzky Liberal New Westminster—Burnaby—Maillardville, BC
Thank you, MP Turnbull.
If you were to give advice to a young Canadian looking to save in the current market, in the current job market, is there any advice you could give to somebody who is looking at the long term and may want to buy a house down the line?
Senior Deputy Governor, Bank of Canada
I'm going to come back to the previous answer to Mr. Hallan. He was asking about the things we need to do to make housing affordable for young people. I think it's really important that we focus on supply. What has worried us over recent years is trying to solve that problem by making it easier for young people to borrow larger and larger amounts of money, messing with mortgage rules and that sort of thing. That worries us. Over the long run, that's going to saddle you with debt. That will mean that you have less money to spend on other things. In general, it's not good for the economy if we have a lot of people who are saddled with a lot of debt. It can make you more vulnerable to economic shocks. Just as our country is more vulnerable when we have a lot of debt, so is a household more vulnerable when it has a lot of debt.
When we think about how to help young people get ahead, it's really important, I think, that we look for ways to raise their incomes and to make housing affordable by increasing supply, not by finding ways to get them into more debt.
Liberal
Jake Sawatzky Liberal New Westminster—Burnaby—Maillardville, BC
Thank you.
On a similar note, perhaps let's consider the case of a business owner who has assets but also high expenses, like paying salaries. Given the current market, is there anything that you would, in general, advise a business owner to consider financially?
Senior Deputy Governor, Bank of Canada
We don't really give advice to business owners. Our job is to help business owners by keeping inflation low and stable. When we can do that, they can make the best business decisions they can.
Liberal
Jake Sawatzky Liberal New Westminster—Burnaby—Maillardville, BC
Thank you.
Just given the current outlook.... I know we've talked about a lot of things, and this may be a bit of tangent, I guess, but is there anything in general that we haven't touched on that you think would be good for people to know?
Senior Deputy Governor, Bank of Canada
I think the thing we would want Canadians to know is something the governor said at the very beginning. We know that the cost of living is tough out there right now. We know that. We have inflation back to 2%, and that's really important. It's really important that we keep costs from going up again the way they did over the past two years because it has that lasting effect.
As much as it is important that we have inflation back to being close to our target and keep it there, that doesn't negate the fact that people are facing a higher cost of living. We wouldn't want Canadians to think that, by repeating the fact that we have inflation at target and want to keep it there, this dismisses the fact that they're experiencing a higher cost of living.
Liberal
Jake Sawatzky Liberal New Westminster—Burnaby—Maillardville, BC
Thank you very much. Again, I really appreciate your time.
Liberal
The Chair Liberal Karina Gould
That's wonderful. On behalf of the committee, I would like to thank our witnesses today.
Thank you to the senior deputy governor, as well as to the Governor of the Bank of Canada. We really appreciate your time and your sharing your thoughts and insights with us.
If it is the will of the committee, we will adjourn.