Will $52.9B in new federal spending make inflation worse?

Heading into this week's federal budget, one question loomed large: would new spending fuel inflation and make it harder for the Bank of Canada to start cutting interest rates?

The bigger issue here is how much the budget depends on inflation working its way back to target in relatively short order.

"It all depends on continued growth," said Sahir Khan, executive vice president of the Institute of Fiscal Studies and Democracy at the University of Ottawa.

You have to have enough rate cuts ahead of the next election to make people feel better as they head to the voting booth, and that's a lot of dependency," he said.

10 hours agoCBC News breaks down the biggest items in the new federal budget — and how the government is planning to pay for billions in new spending.

Then it was supply chain shocks and the sudden spike in price growth, which was followed by one of the fastest and most aggressive cycles of interest rate hikes in history.