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Canada’s new spending to be targeted on health care, clean tech

The government’s responsibility not to pour ‘fuel on the flames of inflation, and force the Bank of Canada’s hand’

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OTTAWA — Finance Minister Chrystia Freeland on Friday said new spending on health care and lean up clean technologies would be in this year’s budget, but she added it was her goal not to fuel inflation.

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It is the government’s responsibility not to pour “fuel on the flames of inflation, and force the Bank of Canada’s hand,” she told reporters after meeting her provincial counterparts in Toronto.

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“Two big areas that are calling out for federal investment” are health care and “building the clean economy of the 21st century,” she said, adding she would be fiscally responsible “even as we need to make these two big investments.”

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The Bank of Canada last week hiked its key interest rate to 4.5 per cent, the highest level in 15 years, and became the first major central bank fighting global inflation to say it would likely hold off on further increases for the time being.

The bank has lifted rates at a record pace of 425 basis points in 10 months to tame inflation, which peaked at 8.1 per cent and slowed to 6.3 per cent in December, still more than three times the two per cent target.

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“I know that interest rates represent a very, very heavy challenge for a large number of Canadian families and therefore the federal government has to adopt a fiscally responsible approach,” Freeland said.

Freeland had promised not to make the central bank’s job of taming decades-high inflation harder when she presented a fall fiscal update, which did however include $11.3 billion in new spending that some analysts said was too much.

Freeland is due to present the budget to parliament in the spring, but a date has yet to be fixed.

© Thomson Reuters 2023

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