(OTTAWA) The Bank of Canada “is causing the inflation it’s supposed to fight,” Jagmeet Singh said Wednesday. The leader of the New Democratic Party (NDP) has added his voice to the chorus of critics denouncing the negative repercussions of Canadian monetary policy on households. Minister Chrystia Freeland continued to defend the independence of this institution.
“You know what the main factor of inflation is now? he asked. A 30% increase in the price of mortgages. »
“According to the Bank of Canada and Justin Trudeau, raising interest rates is supposed to lower inflation,” he continued. This is the purpose of the exercise. But now the Bank of Canada is causing the inflation it is supposed to fight. »
He delivered the speech Wednesday morning at the opening of the caucus of NDP MPs in Ottawa before Parliament resumes on September 18.
The Bank of Canada had announced a little earlier that its key rate would remain unchanged as the economy shows signs of slowing down. This respite comes after 10 increases that took it from 0.25% to 5%, between March 2022 and July 2023.
The institution has been under fire from critics for some time. The premiers of British Columbia, Newfoundland and Labrador and Ontario recently urged her to give households a break.
” Enough is enough ! You are killing the economy,” Ontario Premier Doug Ford said on Tuesday.
Quebec Premier François Legault has been careful not to follow suit.
In Ottawa, Jagmeet Singh pointed out that the slowing economy that follows these increases means fewer jobs will be available, fewer homes will be affordable and ultimately households will have less money to support themselves. their needs.
He believes Prime Minister Justin Trudeau needs to send a message to central bank governor Tiff Macklem that policies that “hurt workers and hurt families” are wrong.
“Of course, the Bank of Canada remains an independent organization, but it is still the Prime Minister and the government who give it the mandate,” qualified the deputy leader of the NDP, Alexandre Boulerice. “An extremely strict, extremely narrow mandate” that could be more flexible.
The Bank of Canada is independent of political power, but its mandate is set by the government every five years. It was renewed in 2021 with an inflation target of between 1% and 3%. The current term will end on December 31, 2026.
Conservative Party Leader Pierre Poilievre also blamed Prime Minister Justin Trudeau. “His inflationary deficits have forced the Bank of Canada to raise interest rates faster than in the entire monetary history of our country, and now he wants to add more inflation with his inflationary deficits,” he said. – he reacted.
He did not repeat the promise to fire the central bank governor he made last July.
Finance Minister Chrystia Freeland recalled these “irresponsible remarks” on the sidelines of a press conference.
At the same time, she defended the independence of the Bank of Canada, which provides “institutional stability” and gives “credibility to the economic and fiscal policy” of the government. Still, she said the stabilization of the policy rate is a “welcome relief” for Canadians.
The inflation rate fell from 8.1% in June 2022 to 3.3% in July this year, she also pointed out in a statement.
“This is good news for households and the economy in general,” responded Bloc Québécois finance critic Gabriel Ste-Marie. “It’s never easy to get inflation back into the target range. »
The economist by training also insisted on respecting the independence of the Bank of Canada. “It is up to the government through its fiscal policies to come and compensate for the negative effects,” he added. He suggested, among other things, to invest more in the construction of social housing. Ms. Freeland could also help the less fortunate by, for example, improving the Old Age Security pension for people aged 65 to 74. The 10% increase granted last year by the Trudeau government applies only to those aged 75 and over.