OTTAWA (Reuters) - The Canadian economy will get a solid boost from Tuesday’s Bank of Canada rate cut of three-quarters of a percentage point, but fiscal stimulus will also be needed, Prime Minister Stephen Harper said.
“First of all, I think the move by the Bank of Canada is very significant, and the monetary policy stimulus, the economic stimulus they’ll get out of today’s announcement, is significant. We’ve already seen some action by our chartered banks,” Harper told CBC television.
“But no, our assessment is we’re going to need additional fiscal policy action.... We don’t need probably as much stimulus as the United States thinks it needs but we’re going to need a significant stimulus package and obviously to address some particular sectoral challenges as well,” he added.
The Conservative government is under increasing pressure to help struggling automakers, and Harper said he was closely watching events in the United States.
“We don’t want to be in a position where we would put ourselves, our sector, at a severe disadvantage because we’re not necessarily doing what they’re doing, or not moving along similar lines,” he said.
“We’ll do what’s in the best interests of the Canadian economy, not just the auto sector ... we have to make sure we don’t pile a bunch of money in and lose jobs anyway.”
Reporting by Randall Palmer and David Ljunggren; editing by Rob Wilson