Public debt slows rise of household debt, BoC says

OTTAWA • The federal government’s steps to amass more public debt have helped Canadians avoid an even faster build-up of their personal debt loads, even though such household burdens have still managed to hit historic highs, the Bank of Canada governor said Tuesday.

Stephen Poloz said Ottawa’s spending in the last couple of years on programs such as enhanced child benefits and infrastructure, have contributed to economic growth.

The extra public investments have also helped push interest rates up to a level higher than they would have been without the government stimulus, he said.

From there, those higher rates have helped slow the accumulation of household debt and, while it’s still climbed to record levels, it’s lower than it otherwise would have been had Canada continued with government belt-tightening approaches