Wednesday, April 17, 2024

Economic recovery: It’s normal for financial aid programs to stop, says Teff McClem

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Maria Gill
Maria Gill
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The same is true for government assistance programs such as the central bank’s monetary easing measures in this time of crisis, says the Governor of the Bank of Canada. As the economy returns to normal, both should be reduced.

It’s no surprise that the government has decided to end many financial assistance programs for workers and businesses affected by the COVID-19 pandemic soon, Tev McClem said at a table Thursday evening. The Bank of Canada has been doing the same thing since it began cutting one of its stimulus measures, trimming its massive purchases of federal bonds in secondary markets as part of its quantitative easing measures.

The Governor of the Central Bank of Canada answered a question about the economic impact of the upcoming end of programs such as the Canadian Economic Stimulus Benefits (CEP). “It is up to governments to determine their policies, but their adjustments are fundamentally in line with what we see in the economy.”

They are not the only ones. The Bank of Canada also reduced its quantitative easing measures, from an asset purchase rate of at least $5 billion a week, during the darkest days of the crisis, to $2 billion today, Tev McClem recalls. According to many experts, his institution could do it again at the end of the month by halving that amount, which would be essentially the same as buying new bonds as the bonds it already holds.

Replacing the Canada Emergency Benefit (CEP), the Canada Assistance Program (CEP) is not the only federal assistance program scheduled to expire October 23. We’re also talking about measures targeting businesses, such as the Emergency Wage Support in Canada (SSUC) and the Emergency Rent Support in Canada (SUCL).

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In Washington this week to meet with his counterparts from other countries, Tev McClem welcomed the rapid and robust response of the world’s governments to the economic devastation caused by COVID-19. As terrible as this crisis may have been, it could have been much worse. […] The recession was not as deep as one might fear, and the recovery, despite its ups and downs, is much better than initially expected. “

He reiterated that the recent rise in inflation must be a passing phenomenon due to disruptions in supply chains and this strange recovery where household and corporate savings were rarely so high, but where savings opportunities are. Health problems. However, he again admitted that this fleeting inflation may take “longer than expected” to subside and assured that he would not hesitate to act if he gave the slightest indication of his desire to merge.

As for the difficulty of many companies in finding the necessary employment even if unemployment remains higher than it was before the pandemic, it reflects, he said, a very simple fact. “It takes time for workers to find the right job, and it takes time for companies to find the right workers.”

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