Finance Committee on May 4th, 2026

[Tiff Macklem]

Which spread are you referring to?

[Greg McLean, Conservative, Calgary Centre, AB]

You can do the five-year or the 10-year rates. I'm talking about the spread of the policy rates.

[Tiff Macklem]

Are you referring to the term premium?

[Greg McLean, Conservative, Calgary Centre, AB]

No, it's the spread. Either spread has advanced 50 points.

[Tiff Macklem]

Issues of fiscal policy are really for the government—

[Greg McLean, Conservative, Calgary Centre, AB]

This is not fiscal. This is monetary.

[Tiff Macklem]

We do run the bond auctions for the Government of Canada, and I can assure you that they're very well covered. I don't want to minimize our problems in Canada, but when you look around the world, you see that we're in a relatively good place compared to many countries. Our deficit-to-GDP ratio is relatively low compared to many other countries. We have energy. We have fertilizer.

When international investors are looking at where they're going to put their money, Canada is looking pretty good.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you.

That's the metric you'll land on, I guess—the deficit-to-GDP ratio—and you'll just include the federal government's portion of that alone, I suppose, when you measure that.

[Tiff Macklem]

You'd want to look at it on a consolidated basis by country.

[Greg McLean, Conservative, Calgary Centre, AB]

With inflation, the broad-based producer price indexes in Canada look like they're going to go up significantly in the near future. That is an indication that interest rates are going to rise.

Do you have any planning about what your balance sheet is going to look like when those interest rates do go up? Once we start having to raise interest rates in Canada, it will affect the whole of the economy.

[Tiff Macklem]

Our balance sheet is not something.... We run monetary policy to keep inflation low and stable; we don't run monetary policy to maximize the profitability of our balance sheet. The balance sheet is an outcome, but it's not something that we're targeting.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you, but there's going to be a serious impact on your balance sheet if you raise interest rates.

[The Chair, Liberal, Karina Gould]

That concludes the time.

Thank you, Mr. McLean.

We'll continue now with Mr. Turnbull for five minutes.

[Ryan Turnbull, Liberal, Whitby, ON]

Thank you.

Governor, given your response to my last question, I noticed that investment growth is expected to strengthen. You were explaining why. You were talking about your business outlook survey. I think you do two surveys. I also noticed that it referred to targeted federal government programs as providing some support.

I wonder which programs were being referred to here. Specifically, when you were last here, I asked about the productivity superdeductions, which are a number of different immediate expensing and accelerated cost allowances that allow businesses to receive greater deductions for investing in themselves. Are those the ones being referred to, or are there some other federal government programs?

[Tiff Macklem]

We've built everything that federal and provincial governments have announced in their budgets into our projections to the best of our abilities. These are macromodels. We don't have separate sectors. What you see there is the roll-up of federal-provincial investment plans.

[Ryan Turnbull, Liberal, Whitby, ON]

Okay, that's great. They are making some headway in terms of increasing investor confidence despite all of the volatility and uncertainty that we're experiencing.

[Tiff Macklem]

It's a projection. We don't know the future.

[Ryan Turnbull, Liberal, Whitby, ON]

I know, and neither do I.

[Tiff Macklem]

The impact of those on the projection is, near term, not a huge impact, because it takes time for the investment to cumulate. As you get towards the end of the projection, they start to have a bigger impact. That's one of the reasons that you see, in the projection, growth at 1.2% this year. I think it's going to 1.6%, 1.7% or 1.8%. That's one reason it's gradually going up. It's not the only reason, but it is one reason.

[Ryan Turnbull, Liberal, Whitby, ON]

I noticed that consumption expands modestly, which is also on that same page, as one of the outcomes or part of the forecast. I know that consumption patterns are really important. Gas prices have eroded purchasing power. There are targeted supports that the federal government has offered such as the groceries and essentials benefit and temporary suspension of the fuel excise tax.

I'm trying to balance...how the government's fiscal policy can counterbalance some of these trends we're seeing throughout the economy, where consumer purchasing power is down and being eroded by oil price shocks that are affecting consumers at the pump. Are those temporary measures going to get us through and counterbalance some of the erosion of consumer purchasing power?

[Tiff Macklem]

You're talking about the excise gas levy.

[Ryan Turnbull, Liberal, Whitby, ON]

Yes.

[Tiff Macklem]

It's not really our job to comment on specific fiscal measures.

It will provide some offset, so inflation will be a little bit lower, for the temporary period that it is applied, than it otherwise would have been. It's about 0.2%, I think, on inflation that the suspension of the gas levy is taking off. Yes, that will help consumers digest the shock a bit.

As the IMF has stressed, it is important that these measures be targeted and temporary. You want to target them to the people who need help the most. Ultimately, we need to let the price system work. You don't want to leave them on any longer than you have to.

[Ryan Turnbull, Liberal, Whitby, ON]

Thank you.

I was hoping you were going to say that. I was going to ask you about the IMF, but I want to share my time with my colleague Mr. Sawatzky.

[The Chair, Liberal, Karina Gould]

You have 45 seconds.