Budget’s impact on Canadian economy will depend on ‘execution’: Macklem

The Bank of Canada governor told MPs he believes the budget got the diagnosis right on what ails the Canadian economy: flagging productivity and low investment levels.

Bank of Canada governor Tiff Macklem said he would not comment directly on measures in the federal budget during a scheduled appearance before the House of Commons finance committee on Wednesday.

But he told members of Parliament he believes the budget got the diagnosis right on what ails the Canadian economy: flagging productivity and low investment levels.

Macklem said that to boost growth and make up for the hit from U.S. tariffs, Canada needs to create conditions that encourage private investment.

That’s a job best suited to targeted fiscal policy, he said, rather than the sweeping effects of monetary policy and changes in the Bank of Canada’s benchmark interest rate.

“I think what’s going to be important in moving forward is the quality of those investments, the quality of that spending, and the execution,” Macklem said.

“That’s not the responsibility of the Bank of Canada, but it is the responsibility of parliamentarians.”

Macklem’s testimony came after Prime Minister Mark Carney defended his first budget as a “bold response” to a global moment of economic disruption, replying to critics who question the ambition of Ottawa’s plans.

“These profound changes require a bold response, and that’s what we got yesterday,” Carney told a news conference in a public transit yard in Ottawa.