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Results: 136 - 150 of 380
View Pierre Poilievre Profile
CPC (ON)
I'm not asking about your balance sheet. I will get to that in a moment.
Who sells the federal government's debt into the market?
Tiff Macklem
View Tiff Macklem Profile
Tiff Macklem
2020-11-26 16:19
We are the agent of the government. We run the government office—
View Pierre Poilievre Profile
CPC (ON)
You are responsible for it, then. You would know what share of the new debt is locked in for 10 years or more.
View Wayne Easter Profile
Lib. (PE)
Pierre, we will have to give the Governor time to answer. This is a very important issue, and I don't want to take this time from you. I don't want to be down to a four-second question and a four-second answer with the Governor of the Bank of Canada, so we are going to have to give at least minimal time.
Go ahead, Pierre.
Tiff Macklem
View Tiff Macklem Profile
Tiff Macklem
2020-11-26 16:20
I don't have the full-term structure of the government's debt in front of me. These numbers change regularly. As you well know, the debt is evolving, the term structure is evolving. The government is in the process of terming out the debt—
View Pierre Poilievre Profile
CPC (ON)
Okay, you don't know. That's all right. Your bank is the one that's issuing the debt, but you don't know how much of it is long versus short term.
We keep being told there is no risk to all this debt because it's all going to be locked in for the long run, but the data on your website shows that 91% of it is for terms of less than 10 years and susceptible to interest rate hikes. Back in 1978 through to 1980, interest rates rose. They tripled. They went from 8% to 22%. No central banker planned that or anticipated it and yet it happened, and the Canadian economy suffered as a result.
Forget a triple increase. What would be the cost to the federal government of a one percentage point increase in the effective rate of interest on its debt?
Tiff Macklem
View Tiff Macklem Profile
Tiff Macklem
2020-11-26 16:20
The current debt is about a trillion dollars, so you can multiply 0.01 by a trillion. That gives you the steady-state increase. In practice, of course, that debt is of varying maturity, so in the first year it will be the amount that rolls over in the first year. In the second year it will.... When the whole thing rolls over it will be 0.01 times a trillion. That could take several years.
View Pierre Poilievre Profile
CPC (ON)
What would be the effect of the cost to the Canadian economy of a 1% effective increase in the interest rate?
Tiff Macklem
View Tiff Macklem Profile
Tiff Macklem
2020-11-26 16:21
Do you want a GDP number? What do you want exactly?
Tiff Macklem
View Tiff Macklem Profile
Tiff Macklem
2020-11-26 16:21
The situation in which we'd increase interest rates is if the economy is in a better situation than it is now, so we're not—
View Pierre Poilievre Profile
CPC (ON)
So you can't give a number for that.
Tiff Macklem
View Tiff Macklem Profile
Tiff Macklem
2020-11-26 16:21
As we've indicated from our forward guidance, we're not contemplating raising interest rates at the moment.
View Annie Koutrakis Profile
Lib. (QC)
View Annie Koutrakis Profile
2020-11-26 16:30
Thank you.
That's a great segue into my next question, because your most recent monetary policy report notes that a significant amount of slack and excess capacity in the economy will likely hold inflation down until 2022 or 2023. In addition to this, the PBO fiscal sustainability report published on November 6 says that the federal government's current fiscal policy is sustainable, with room to permanently increase spending. While federal levels of spending and debt are widely considered sustainable, there are concerns that the spending of some provinces is unsustainable.
What can the Bank of Canada do to address the fiscal sustainability of provinces, and is there a role that the federal government can play in managing provincial debt?
Tiff Macklem
View Tiff Macklem Profile
Tiff Macklem
2020-11-26 16:31
Okay. I think I can be pretty brief.
On the first part of the question, it's up to the provinces to manage their fiscal affairs responsibly. By lowering the yield curve for Government of Canada debt, that helps provincial governments too. They fund at a premium over the Government of Canada curve, so when you lower the Government of Canada curve, it tends to lower the provincial curve as well. Indirectly, we are reducing their cost of financing as well, but that would really be the extent of it.
Results: 136 - 150 of 380 | Page: 10 of 26

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