Treasury Secretary Chrystia Freeland and US Treasury Secretary Janet Yellen have pledged to help central banks tackle inflation by reducing deficit spending, but Ms Yellen was reluctant to reopen talks on the Keystone pipeline as a way to reduce oil prices. The two politicians made the comments Monday during a day of events in Toronto that included private meetings, a public, hour-long discussion in an armchair and an afternoon press conference. Consumer prices on both sides of the border are rising at the fastest pace in decades – they have been pushed higher in recent months by rising oil prices. High inflation is eroding wages and forcing the US Federal Reserve and the Bank of Canada to quickly raise interest rates in a bid to reduce demand. Ms Yellen said tackling inflation was primarily the responsibility of central banks, but added that she and US President Joe Biden were considering a number of policy options that could help, including reducing the deficit and raising some taxes. consider reducing the gas tax. The Alberta government has urged the Biden government to tackle high oil prices by overturning its decision in 2021 to cancel the Keystone XL pipeline that would carry Canadian crude to US refineries. Ms Freeland said she raised the issue of Keystone privately on Monday, but Ms Yellen said she did not see it as a solution to high prices. “I do not see it as a short-term measure to deal with the current situation. And in the long run, we remain committed to our goals of climate change. “But you know, it’s really up to the President to look into it,” Ms Yellen told a news conference this afternoon. Ms Yellen was indeed open about the idea of a short-term reduction in gas taxes. “Consumers are really affected by the higher gas prices. It was a significant burden on American households. “And I think that, although it is not perfect, it is something that should be considered as a policy to deal with it,” he said. What is stagnant inflation and does it lead to recession? What you need to know as global financial concerns grow How should workers prepare for a possible recession? Ms Freeland, who hears daily calls from conservative lawmakers in the House of Commons on Monday to cut gas taxes, said she did not rule anything out. However, he said a cut in the gas tax would hurt the government’s efforts to reduce the deficit, and noted that Canada’s climate change policy provides payments that offset the cost to consumers of carbon pricing. “The situation in Canada is a little different because our price for pollution includes an element where we return the money to Canadian families,” he said, adding that Canada was “ready to do more if needed.” Inflation was already at the peak of many decades at the beginning of the year. The shock to the oil price after the Russian invasion of Ukraine made things worse. Annual inflation reached a 40-year high of 8.6% in the US in May and a 31-year high of 6.8% in Canada in April. Canada’s May consumer price index data will be released on Wednesday, and most economists expect it to be well above 7 percent – a number not seen since the early 1980s. The US government has tried to reduce oil prices by releasing one million barrels of oil daily from the country’s strategic reserves. Ottawa has said it wants Canadian energy companies to increase oil production by about 200,000 barrels a day and gas by 100,000 barrels a day by the end of the year. Canada exports about 3.5 million barrels of oil to the United States every day. “As an energy producer, we take our responsibility to our allies very seriously and so we work hard to increase production,” said Freeland. Lisa Bayton, president and CEO of the Canadian Petroleum Producers Association, said energy companies were in talks with the government to increase production, but transportation issues could hamper efforts. “Right now, Canadian producers are reaching record production and export records. “However, our transport infrastructure is approaching capacity and will only increase by just over half a million barrels a day with the completion of the Trans Mountain expansion next year,” Ms Baiton said in an email. Ms Freeland said both federal governments needed to “walk in and chew for energy right now” – encouraging increased production to cut prices today while investing in more renewable energy sources. “The energy crisis that [Russian President Vladimir] “Putin’s invasion of Ukraine has led to another reason for us to take climate action really seriously.” During the lounge debate, Ms. Yellen and Ms. Freeland called on like-minded democracies to deepen trade ties as part of a global effort to reduce dependence on goods from China and Russia. Ms Freeland said the Russian invasion of Ukraine and the almost three-year detention of Canadians Michael Kovrig and Michael Spavor, who were released last year, underscore the need to move trade between the two countries in favor of “friend support”. . phrase often used by Mrs Yellen. “The world’s democracies do not want to depend on Russia and China for the critical minerals and metals needed to build electric batteries or semiconductors, or to power nuclear reactors, or to make fertilizers, or even for energy sources. “This is no longer safe,” said Freeland. “And guess who has almost all these things? Doing. Canada does. And I personally believe that we owe it to our allies as good partners to really move forward. “But it is also a great economic opportunity for our country,” he said. Ms Yellen said the United States and Canada were discussing securing North America’s critical mineral supply chains, although she said talks were at a relatively early stage. Discussions about supply chain security are occurring as the economic outlook worsens. High inflation is squeezing household finances and reducing consumer confidence. Meanwhile, central banks are raising interest rates at the fastest pace in decades in hopes of curbing high inflation. This increases the likelihood that central banks will tighten monetary policy too much and push their economies into recession. Ms Yellen said in a televised interview on Sunday that she expected the US economy to slow. “But I do not think a recession is inevitable,” he said. This assessment is shared by Toronto Dominion Bank economists, led by chief economist Beata Caranci, who moderated the debate with Ms Yellen and Ms Freeland on Monday. “Growth is expected to fall significantly below the long-term trend in both the US and Canada, and unemployment rates are projected to rise from their current lows,” Caranci and her team wrote in an updated economic forecast. published on Monday. . “We do not predict a recession, but with growth approaching stagnation, there is very little room for error if another shock hits economies.” Some economists say Ottawa is not doing enough to cut fiscal spending in the face of rising inflation. Bank of Nova Scotia chief economist Jean-François Perrault and model and forecast manager René Lalonde released a note at the weekend claiming that government spending is hampering the Bank of Canada’s work. “The simple reality is that businesses and households will make compromises as they incorporate higher inflation and financing costs into their budgets. “It seems absurd for governments not to do the same,” they wrote. During Monday’s press conference, Freeland rejected a proposal that the government was not financially responsible, arguing that the April budget set Canada on a path to faster debt and deficit reduction in the G7 – linked to United States. For subscribers: Receive exclusive political news and analysis by subscribing to Political information.
