Following Poilievre's attacks, Bank of Canada governor says he welcomes criticism
'I'm going to leave politics to the politicians,' Tiff Macklem says while defending his performance
Bank of Canada Governor Tiff Macklem shrugged off Conservative leadership contender Pierre Poilievre's pointed criticism of him and the central bank Thursday, saying he welcomes input from elected officials and he knows inflation is too high.
Speaking to reporters at a press conference after the release of the Bank of Canada's financial system review, which identifies expected threats to the economy in the year ahead, Macklem said he wouldn't address Poilievre's criticisms head-on.
As a public institution, he said, "we welcome diverse views. We welcome analysis. We welcome criticism of our work and our decisions. We're doing that ourselves."
In his fight for the party's top job, Poilievre has emerged as a fierce critic of Canada's central bank. He's tried to link decades-high inflation to its COVID-era policy of quantitative easing and recently slammed the institution as "financially illiterate."
Poilievre has said that a government led by him would extend the auditor general's authority to include the Bank of Canada and push for a review of its pandemic policies.
During a Conservative leadership debate last month, Poilievre also said that he'll fire Macklem if he becomes prime minister — a promise that prompted criticism from some who said the Conservative MP is unfairly politicizing an institution that has always operated at arms-length from partisan politics.
Poilievre has since doubled down, accusing the Bank of "printing money" through quantitative easing to fuel the federal Liberal government's pandemic-related spending — spending he blames for higher prices.
"The elites in Ottawa are beside themselves that I would hold them to account for harm they've caused to everyday people. That's my job. I don't work for the elites. I work for you, the people, as a servant, not master," Poilieivre said in a recent social media post.
Asked about Poilievre's promise to put him out of a job, Macklem said, "I'm going to leave politics to the politicians."
But he defended the Bank's actions during the pandemic crisis.
Macklem said it was prudent to pursue a policy of quantitative easing — a process which sees the central bank "print" more money to buy assets such as government and corporate bonds held by banks and other institutions — because the financial markets were "frozen."
As a number of other central banks did during the Great Recession of the late 2000s, the Bank embraced quantitative easing to boost lending and spending during a time of financial panic. That policy ended in October 2021.
The Bank's move to buy up these bonds provided much needed liquidity during a time of uncertainty, Macklem said.
"We did that at scale and it worked," he said. "Financial markets unfroze relatively quickly and that was key to making sure a very deep recession didn't become a depression.
"We provided exceptional monetary policy support to put a floor under what was the deepest recession we've ever had to support the recovery and it worked. We've now got some new challenges."
Economy 'needs higher interest rates' — Macklem
Macklem said he understands the seriousness of the current spike in inflation. The Bank's goal is to keep inflation at 2 per cent. Currently, it's closer to 7 per cent. He said the Bank is prepared to hike interest rates further to cool down a red-hot economy.
"We think the economy can handle higher interest rates. It needs higher interest rates," he said.
Some prominent economists have criticized the Bank and its American equivalent, the U.S. Federal Reserve, for their handling of inflation, claiming these institutions could have moved faster to raise interest rates.
Instead, Macklem and his U.S. counterpart, Jerome Powell, described the economy-wide price spikes as "transitory" — something that would abate relatively quickly as the pandemic faded away. That theory hasn't panned out.
"If you had perfect hindsight you'd go back, and it probably would have been better for us to have raised rates a little sooner," Powell said in a recent interview with NPR.
"I'm not sure how much difference it would have made, but we have to make decisions in real time, based on what we know then, and we did the best we could."
Bank of Canada official issues warning about cryptocurrency
During Thursday's presentation, Carolyn Rogers, the senior deputy governor of the Bank of Canada, identified cryptocurrency — an investment product Poilievre has championed — as a point of "vulnerability" in the Canadian economy.
Earlier this year, Poilievre said Canadians could "opt out" of inflation by pouring money into assets like Bitcoin. That suggestion has prompted criticism from leadership rivals who say that if Canadians listened to Poilievre, they'd be out a lot of money. The price of Bitcoin has dropped some 50 per cent since its November 2021 high.
Like other speculative assets, Rogers said, Bitcoin is "vulnerable to large and sudden price declines."
"The risks may not be well understood by investors," she said.
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