(Ottawa) Finance Minister Chrystia Freeland is defending the independence of the Bank of Canada, which has come under fire from the Conservative Party and now the NDP.
Posted at 1:09 p.m.
On the eve of another major increase expected in the Bank of Canada’s key rate, Mme Freeland argued that the independence of this institution is essential in a democracy like Canada.
“It’s very important to be aware of the global economic reality today. We are now in a complicated and quite difficult period. And for me, one of the most important things for Canada is institutional stability, including the independence of the Bank of Canada,” the minister said before a cabinet meeting.
The Minister said she understood “very well” the difficulties that Canadians and families are experiencing due to the rising cost of living. “And I also understand that interest rates are difficult,” she said.
But she added that the government is acting by providing targeted assistance to the most vulnerable families and following prudent fiscal policy so as not to fuel inflation and undermine the Bank of Canada’s efforts to control it.
On Wednesday, the Bank of Canada is expected to announce another major interest rate hike. Most observers expect another 75 percentage point increase.
Since last March, the Bank of Canada has raised its key interest rate from 0.25% to 3.25% – the highest increase among the G7 countries. This increase has obviously boosted borrowing costs for families and businesses.
Although inflation has slowed somewhat over the months, Bank of Canada Governor Tiff Macklem has made it clear that it is too early to take a break.
The Bank of Canada has come under heavy criticism from Conservative Party leader Pierre Poilievre, particularly during the leadership race. Mr. Poilievre accuses the Bank of Canada of contributing to rising inflation “by printing money” during the pandemic. He also promised to fire Governor Tiff Macklem if he takes office in the next election.
For his part, NDP Leader Jagmeet Singh criticized the work of the Bank of Canada in a letter he sent to Prime Minister Justin Trudeau last week.
In the letter, Mr. Singh argued that the Bank of Canada would do more harm than good by raising interest rates to tackle inflation.
“This unique solution to inflation is already laying the groundwork for a recession and making life difficult for most people, especially working families and people on fixed incomes, such as seniors and those in dire straits. disability,” he said in his missive.
“Most disturbing are recent comments by Tiff Macklem, Governor of the Bank of Canada, who advised companies not to build higher wages into contracts with their employees, despite the fact that wages are far behind. to keep up with inflation. This is clearly beyond the jurisdiction of the Bank of Canada. Canadian workers are losing ground every month as inflation effectively cuts their paychecks,” he also wrote.
Mr. Singh concluded his letter by asking the Prime Minister to adopt a series of measures in the economic and fiscal update to be delivered by Minister Freeland in early November to help Canadians survive this economic storm.