Bank of Canada Governor Tiff Macklem is reminding Canadians it’s not his job to be a part of the federal government’s spending decisions. However, that didn’t stop members of Parliament from grilling the governor about the effects of government spending on inflation, and whether Liberal fiscal policies are fuelling or cooling price pressures in Canada.

Macklem pushed back multiple times against this line of questioning from both sides of the political aisle, citing the central bank’s independence and separate spheres of influence on policy.

Citing guidance from the International Monetary Fund, Macklem, said government supports that are temporary and targeted towards the most vulnerable Canadians would be ideal to avoid inadvertently fuelling inflation.

When government programs contribute to aggregate demand — they stimulate spending economic output — without accordingly boosting supply. That can push inflation higher, he said.

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