Close X
Thursday, November 28, 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

Fiery head-on crash between two tractor trailers kills driver in B.C.

Fiery head-on crash between two tractor trailers kills driver in B.C.
Mounties in B.C.'s southern Interior say a fiery head-on crash between two tractor trailers has claimed the life of one of the drivers. The crash on Thursday shut the Trans-Canada Highway down for much of the day. 

Fiery head-on crash between two tractor trailers kills driver in B.C.

8 Sikh men arrested for firearm-related offences in Canada

8 Sikh men arrested for firearm-related offences in Canada
Police have arrested eight Sikh men between 19 to 26 years of age and charged them in connection with possession of loaded, prohibited or restricted firearms in the Canadian city of Brampton. Officers from the Peel Regional Police responded to reports of shots fired in the area of Donald Stewart Road and Brisdale Drive in Brampton at 10.25 p.m. on Monday.  

8 Sikh men arrested for firearm-related offences in Canada

Canada-India dispute likely target for disinformation efforts, State Department warns

Canada-India dispute likely target for disinformation efforts, State Department warns
A senior State Department official says Canada's dispute with India could make for fertile ground for foreign efforts to sow disinformation. James Rubin, the co-ordinator of the Global Engagement Center, says the diplomatic standoff makes Canada "ripe" for manipulation, and not just from inside India.

Canada-India dispute likely target for disinformation efforts, State Department warns

4 year prison sentence for Kelowna robber

4 year prison sentence for Kelowna robber
A man who held up a bank in Kelowna and fled with more than 40-thousand-dollars in cash has been sentenced to four years in prison. Alan Stuart Metcalfe was sentenced in August after pleading guilty to one count of robbery, and the decision was released online this week.  

4 year prison sentence for Kelowna robber

Series of fires outside Mission

Series of fires outside Mission
The Mounties say police and firefighters responded Wednesday evening to a report of a structure fire on a vacant property along Gunn Avenue and found several buildings on fire, with indications that the blazes had been set intentionally. They say police responded to flames on a different property along the same road yesterday and again found they appeared to have been sparked intentionally.

Series of fires outside Mission

B.C. COVID-19 hospitalizations up 58% in two weeks, as infections, deaths also spike

B.C. COVID-19 hospitalizations up 58% in two weeks, as infections, deaths also spike
COVID-19 cases are on the rise in British Columbia, with the BC Centre for Disease Control reporting hospitalizations have increased 58 per cent in the past two weeks. The centre says in its latest update that deaths due to COVID-19 are also trending upwards, with 24 fatalities in the last week of September, compared to nine in the second week of August. 

B.C. COVID-19 hospitalizations up 58% in two weeks, as infections, deaths also spike