Bank of Canada Governor Tiff Macklem said Prime Minister Justin Trudeau’s recent budget did not significantly change the fiscal track that the government laid out in November. 

It was “helpful” that Finance Minister Chrystia Freeland met the fiscal guardrails that she set out in her fall budget update, Macklem told reporters Friday after the annual meetings of the International Monetary Fund and World Bank Group in Washington. “At a macro level, there’s more money going out, there’s more money coming in on net.”

The 2024 federal budget, announced Tuesday, maintained Freeland’s pledge to hold the deficit at about $40 billion (US$29.1 billion). It projected revenue gains from better economic output and tax hikes for the richest Canadians and corporations, while adding hefty increases in spending for housing and defense. Some analysts had raised concerns that these expenditures would add to the expansionary policies of provinces, making the bank’s job in taming price pressures much harder. 

Macklem also spoke of potential divergence in monetary policy across countries.

“As we enter the next phase of disinflation countries may progress at different speeds,” Macklem said, adding that while countries around the world have made significant progress on inflation, global growth is running hotter-than-expected — especially in the U.S.

“We’re all working toward similar objectives and asking the same questions, but ultimately we gear monetary policy decisions to our own domestic circumstances,” Macklem said.

Macklem and his officials next set the key policy rate on June 5, after another inflation print as well as April jobs and first-quarter output data. About 60 per cent of economists in a Bloomberg survey expect a 25 basis-point reduction in June, which would mark the start of an easing cycle after policymakers held borrowing costs at 5 per cent for six straight meetings. 

Earlier this week, the International Monetary Fund lifted its projection for global economic growth to 3.2 per cent this year, up 0.1 percentage point from its January estimate. Canada’s 2024 growth, however, was revised down to 1.2 per cent, from 1.4 per cent. The forecast for next year was unchanged at 2.3 per cent.

Macklem said economic strength in the first quarter will be sustained through 2024 but quarterly GDP growth will likely continue to be “choppy,” with household spending falling.