Close X
Sunday, November 24, 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

Influx of Avian Flu in BC

Influx of Avian Flu in BC
Farmers in B-C are preparing for an influx of avian flu cases as wild birds begin migrating south. But a spokesperson for the B-C Poultry Association Emergency Operations Centre says he doesn't expect as much devastation as last year.   

Influx of Avian Flu in BC

Road closures due to Whalley collision

Road closures due to Whalley collision
On Thursday at after 1:30pm Surrey RCMP responded to a report of a pedestrian struck by a semi-truck in the southbound lanes of King George boulevard just north of 104 Avenue. The pedestrian has been transported to hospital with serious injuries. There are single lane closures on both on the northbound and southbound side of King George boulevard between 104 Avenue and 105 Avenue. 

Road closures due to Whalley collision

Federal effort to boost child care in three provinces off to 'slow start': report

Federal effort to boost child care in three provinces off to 'slow start': report
The report by Cardus looking at the roll out of the programs in British Columbia, Saskatchewan and New Brunswick found that issues ranging from unspent funding to skilled labour shortages led to missed child care targets. The federal government signed separate, five-year funding agreements with provinces and territories in 2021, committing up to $30 billion in five years toward the establishment of $10-a-day child care.  

Federal effort to boost child care in three provinces off to 'slow start': report

Pharmacare would cost public sector billions more a year, but save economy money: PBO

Pharmacare would cost public sector billions more a year, but save economy money: PBO
The parliamentary budget officer says a single-payer universal drug plan would cost federal and provincial governments an additional$11.2 billion in the first year, and $13.4 billion in five years. The PBO released a report on Thursday that provides an estimate for the cost of a pharmacare program between 2024-25 and 2027-28. It follows up on a previous costing the PBO published in 2017 for a pharmacare plan. 

Pharmacare would cost public sector billions more a year, but save economy money: PBO

Supreme Court of Canada refuses to hear Hells Angels appeal of B.C. forfeiture ruling

Supreme Court of Canada refuses to hear Hells Angels appeal of B.C. forfeiture ruling
The Supreme Court of Canada's refusal to hear a Hells Angels challenge of B.C.'s forfeiture of three clubhouses will "put criminals on notice," the province's pubic safety minister says. The high court ended a years-long court battle on Thursday as it refused to hear an appeal of the seizure of the clubhouses in East Vancouver, Nanaimo, and Kelowna.

Supreme Court of Canada refuses to hear Hells Angels appeal of B.C. forfeiture ruling

Canada committing $10M in humanitarian aid for Israel, Gaza as Canadian flights leave

Canada committing $10M in humanitarian aid for Israel, Gaza as Canadian flights leave
Prime Minister Justin Trudeau says Canada is giving an initial $10 million in humanitarian assistance for urgent needs in Israel and the Gaza Strip. He also says the first airlift of 130 Canadians that left Tel Aviv earlier today has landed in Athens.

Canada committing $10M in humanitarian aid for Israel, Gaza as Canadian flights leave