Economic Stimulus Should Have Stopped Earlier to Tame Inflation, Bank of Canada Says

Bank of Canada deputy governor Paul Beaudry said in hindsight, governments and central banks should have withdrawn stimulus measures earlier as economies recovered from the COVID-19 pandemic, which likely would have kept a lid on inflation.
In a speech at the University of Waterloo on Sept. 20, Beaudry said a faster global withdrawal of fiscal and monetary stimulus during the recovery from the pandemic would have likely resulted in lower inflation.
Beaudry said fiscal and monetary policy in one country has spillover effects in other nations that are not always accounted for.
One of the lessons from the global financial crisis in 2008-2009, he said, was that countries would have benefited from a more gradual withdrawal of stimulus because of spillover effects….

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