MNI BRIEF: IMF Says Canada Needs Debt-To-GDP Fiscal Anchor

Prime Minister Mark Carney's first budget gave some appropriate support dealing with the shock from U.S. tariffs according to an IMF staff report Friday, but the review also suggested returning to the abandoned fiscal anchor of lowering debt as a percentage of GDP. 

"A clear debt-to-GDP anchor should remain central to Canada’s fiscal framework. Budget 2025 rightly pivots toward higher public investment while maintaining discipline through the new deficit and operating-balance anchors, enabling decisive action in a volatile global environment," the "Article IV" report said. 

The Bank of Canada's rate cuts to 2.25% have been appropriate and so is the current stance, the report said. Governor Tiff Macklem in October said he's likely done cutting if his economic forecast is realized. "Further easing could be considered if underlying pressures continue to fade and slack widens, while taking account of how fiscal measures shape both demand and supply," the IMF said. (See: MNI: Canada Deficits Leave Room For Flexible BOC-Ex-Officials)