Scotiabank Economics Vice-President and Head of Capital Markets Economics Derek Holt is blasting the federal government for stimulus measures his team argues contribute to inflation.

Holt said any argument that federal spending has not inflamed price pressures does not jibe with economic fundamentals in the wake of the feds announcing another $4.5 billion worth of spending.

“It’s not a coincidence that it is timed to be arriving just in time for holiday shopping season. If you didn’t want people to spend it and you didn’t want people to spend it, give it to people in February — when most of us are already dealing with two feet of snow on the ground after we’ve already blown our wallets on the holiday season,” he said in an interview Friday.

“There’s this narrative that says inflation has nothing to do with stimulus at home — central banks, governments, didn’t cause any of it — it’s just all global supply chains and greedy corporations. That suits their cause, but it’s factually false.”

Canadian inflation has moderated from almost a four-decade high of 8.1 per cent, falling to 7.6 per cent in July, but still remains more than three times higher than the Bank of Canada’s two per cent target. The central bank has responded by raising its policy rate to 3.25 per cent from the pandemic trough of 0.25 per cent, though the conventional wisdom is that it takes between 18 and 24 months for interest rate hikes to work through the economy.

Holt said the federal government could help limit inflation in the domestic economy by easing up on new spending.  

“The appropriate policy response is to stop this habit of serial stimulation — serial stimulators throwing more and more cash, driving more and more inflation, making the Bank of Canada’s job perennially more difficult,” he said.