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Here is a link to see other videos from our team. The government should continue on its current fiscal path as a result of a report to investors, or 'Stay the course': Desjardins backs Trudeau on the fight against inflation, argues against austerity. With the elimination of pandemic aid acting as a drag on growth, the credit union argued that any further consolidation of fiscal spending would be a mistake and hurt vulnerable Canadians who may need support as interest rates rise and inflation bites. The senior director of Canadian economics at Desjardins, Randall Bartlett, said in the report that the federal government should stay the course. It should follow its plan to gradually lower spending and let the Bank of Canada do its job on the front lines of the fight against inflation. That is consistent with the relatively dovish outlook for rates at Desjardins. The economy will grow at 1.1 per cent next year, less than half of the median 2.4 per cent expected in a Bloomberg survey, according to Desjardins. Finance Minister Chrystia Freeland has come under fire in recent weeks because of criticism that government spending has contributed to inflation, which has jumped to a four-decade high of 7.7 per cent in May. With rising prices now the biggest political issue in the country, Trudeau's team is trying to downplay its responsibility for ongoing affordability concerns.
Bartlett said that spending in the provinces is projected to fall more slowly and could be a better way to reduce fiscal stimulus. As output slows down, cutting spending would help the Bank of Canada get inflation back to the two per cent target with fewer interest rate hikes, which could prevent economic damage to the private sector, according to analysts at the Bank of Nova Scotia. Critics say the government is falling short on a promise to take joint responsibility for fighting inflation along with the Bank of Canada in December. Freeland told the Canadian Broadcasting Corp. this weekend that she does not want to make the Bank of Canada's job harder than it already is because of the government's challenge to balance Canadians and fiscal restraint.