Latest / Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates
How Central Banks Use Structural Budget Deficits
Episode 106 of Monetary Policy Explained with Fexingo. Lucas and Luna dive into the little-discussed concept of structural versus cyclical budget deficits and how central banks factor them into monetary policy. Using Canada's 2024–2026 federal budget as a case study, they break down why the Bank of Canada pays attention to the cyclically adjusted balance, how a high structural deficit can complicate interest rate decisions, and what the 'fiscal path' signals mean for inflation and the neutral rate. The hosts also touch on how markets interpret government spending commitments…
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