The Canadian economy is gradually slowing toward potential and inflation is declining, although the still-strong labor market and renewed housing pressures underscore the importance of the Bank of Canada’s restrictive stance and of maintaining a data-dependent posture. Fiscal policy has been mildly contractionary, building on strong consolidation since 2020. Canada’s public debt is relatively low in international comparison, and to further enhance fiscal credibility, the government could consider adding to its commitment to medium-term debt reduction by adopting a quantitative fiscal framework. Meanwhile, financial ... (full story)