The central bank's key interest rate currently stands at a 15-year high of 4.5% after a 25 basis point hike in January, when the bank said it would likely hold off on further moves to let the effects of the previous rate increases sink in. On a monthly basis, Canada posted a deficit of C$1.98 billion in December, compared to the C$3.58 billion surplus recorded a year ago. ($1 = 1.3642 Canadian dollars) (Reporting by Ismail Shakil, editing by Steve Scherer)
(Corrects dateline to Feb. 24 from Jan. 27; no change to
headline, text)
OTTAWA, Feb 24 (Reuters) - Canada recorded a C$5.54
billion ($4.06 billion) budget deficit for the first nine months
of the 2022/23 fiscal year, partly due to a rise in debt charges
linked to higher inflation and interest rates, the finance
ministry said on Friday.
By comparison, Canada posted a C$70.11 billion deficit in
the period from April to December 2021.
Year-to-date revenues were up 11.4% on a broad-based
improvement in income streams. Program expenses were down 12.3%,
largely reflecting lower transfers to individuals and businesses
as COVID-19 supports were wound down, the finance ministry said.
Public debt charges increased 38.4% this fiscal year,
primarily reflecting higher interest rates and higher inflation
adjustments on real return bonds, which have a coupon that is
linked to the level of the consumer price index.
The Bank of Canada has raised rates at a record pace over
the past year to tame high inflation that peaked at a
four-decade high in June.
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