Desjardins backs Trudeau on inflation, argues against austerity

One of Canada’s biggest credit unions is warning against deeper spending cuts from Prime Minister Justin Trudeau’s government to wrestle down inflation, saying the economy is poised to slow sharply.

Desjardins Securities Inc. entered the debate on how fiscal policy should look amid soaring inflation Wednesday, saying in a report to investors that the government should continue on its current fiscal path. 

With the elimination of pandemic aid already 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. 

“We’re of the view that the federal government should stay the course,” Randall Bartlett, senior director of Canadian economics at Desjardins, said in the report. “It should follow its current plans to gradually lower spending and let the Bank of Canada do its job on the front lines of the fight against inflation.”