Close X
Sunday, November 10, 2024
ADVT 
National

Macklem warned premiers about dangers of putting BoC's independence at risk

Darpan News Desk The Canadian Press, 24 Oct, 2023 09:57 AM
  • Macklem warned premiers about dangers of putting BoC's independence at risk

Bank of Canada Governor Tiff Macklem warned premiers who publicly asked the central bank to not raise interest rates last month that their requests could undermine the institution's independence. 

The premiers of Ontario, British Columbia and Newfoundland and Labrador wrote to Macklem ahead of the Bank of Canada's Sept. 6 rate decision, outlining concerns about the effects of higher rates on their residents and asking the central bank not to raise its key rate further.

In a Sept. 13 letter, Macklem warned that instructions or requests from elected officials could give the impression that the Bank of Canada's independence is at risk.

The response was dated one week after the central bank governing council opted to hold its rate steady. Though Macklem acknowledged that higher interest rates are making life challenging for Canadians, he also noted that inflation, which higher interest rates are intended to combat, hurts the most vulnerable people in society. 

The central bank operates independently from the federal government.

"While I am very pleased to get your perspectives on the impact of our policy decisions, instructions or requests from elected officials about how we should set interest rates could create the impression that the Bank of Canada’s operational independence is at risk. I am sure you agree that this would be unfortunate," Macklem wrote in his responses to each of the premiers. 

"Operational independence is critical to the legitimacy of the central bank, and to the effectiveness of monetary policy as a means to achieve price stability."

Macklem's caution, however, appears to have been sidestepped by Ontario Premier Doug Ford who has once again sent a letter urging the central bank to not raise interest rates as it prepares for a rate announcement on Wednesday. 

Ford published the letter dated Oct. 22 on X, the platform previously known as Twitter, on Sunday.

The Bank of Canada is widely expected to hold its key interest rate steady this week as the economy weakens and inflation eases. The latest monthly inflation data, released last week, showed price growth had slowed to 3.8 per cent in September. That was better than many economists predicted.

The exchange between Macklem and the premiers is the latest example of the heightened political scrutiny the Bank of Canada has faced for its policy decisions post-pandemic, when the country faced its highest levels of inflation in 40 years.

Last year, Conservative Leader Pierre Poilievre vowed to fire Macklem as he blamed the central bank for the run-up in inflation. 

Meanwhile, the NDP has spoken out against the interest rate increases and recently suggested that the federal government could ask the Bank of Canada to stop raising interest rates. 

Finance Minister Chrystia Freeland also faced criticism last month for saying the Bank of Canada's decision to hold its key rate steady was "welcome relief for Canadians." 

During a news conference earlier this month, Macklem said the turmoil over rising interest rates in the political and public spheres are symptoms of high inflation.

“I think, sadly, what you’re seeing is exactly what inflation does. Inflation erodes confidence in institutions, it erodes confidence in governments. It makes people feel like they’re getting ripped off. We are seeing more strikes in this country, you’re seeing more strikes in other countries. These are symptoms of inflation,” Macklem said.

Restoring price stability is the best way to address these issues, the governor said at the time, though he acknowledged getting there won’t be easy and will come with financial pain for families.

 

MORE National ARTICLES

B.C. to bring in new rules on short-term rentals to create more housing

B.C. to bring in new rules on short-term rentals to create more housing
Premier David Eby says the number of short-term rentals has ballooned in recent years and the government is taking action to reduce “profit-driven mini-hotel operators” by bringing in new enforcement tools. Housing Minister Ravi Kahlon introduced the bill in the legislature today, saying there has been "an explosion" of short-term rental units and this legislation will target areas with high housing needs.

B.C. to bring in new rules on short-term rentals to create more housing

Man charged with murdering B.C. woman who went missing in 2022

Man charged with murdering B.C. woman who went missing in 2022
Police say that after an almost yearlong investigation, homicide investigators have determined that 57-year-old Jodine Millar was murdered. Millar was reported missing on Nov. 28, the same day police found her empty car after a crash on Highway 1.

Man charged with murdering B.C. woman who went missing in 2022

Suspicious fire guts B.C. elementary school, plans underway for students and teachers

Suspicious fire guts B.C. elementary school, plans underway for students and teachers
Coquitlam School District 43 says in a statement to families on its website that plans are in the works to support continued learning for the school community at Hazel Trembath Elementary School in Port Coquitlam. Coquitlam RCMP say they are investigating a suspicious fire at the school, which was fully engulfed when first responders arrived at the scene early Saturday.

Suspicious fire guts B.C. elementary school, plans underway for students and teachers

New Westminster's Balvir Singh charged with stabbing

New Westminster's Balvir Singh charged with stabbing
The Integrated Homicide Investigation Team says 57-year-old Balvir Singh of New Westminster was charged Saturday with second-degree murder. I-H-I-T is identifying the victim as 46-year old Kulwant Kaur of New Westminster.

New Westminster's Balvir Singh charged with stabbing

Surrey to ask court to review provincial order to stay with municipal police

Surrey to ask court to review provincial order to stay with municipal police
The city issued a statement on Friday saying it was asking for a judicial review by the Supreme Court of British Columbia, challenging the province's "lawful authority" to impose its choice of police force without providing the funding to support such a move.

Surrey to ask court to review provincial order to stay with municipal police

No charges for Prince George cop

No charges for Prince George cop
Prosecutors in British Columbia say they won't be charging an RCMP officer in connection with the death of an Indigenous man in Prince George in 2020. A statement from the prosecution service says that although the province's independent watchdog said there were reasonable grounds to believe the officer may have committed an offence, the evidence available isn't enough for charges.

No charges for Prince George cop