The Bank of Canada’s deputy governor acknowledged on Thursday that the institution has failed to keep inflation at its target rate and should be “held accountable.”
Paul Beaudry made the remarks in response to Conservative leadership candidate Pierre Poilievre’s statement last month that Bank of Canada Governor Tiff Macklem was “handing over his independence” to Prime Minister Justin Trudeau through a relaxation program quantitative “money printing” in response to the pandemic. driven by economic crisis.
During the party’s official English-language debate in Edmonton, Poilievre also said he would fire Macklem if he became prime minister.
Journalists on Thursday asked Beaudry to respond to those remarks.
“The aspect that should hold us accountable is exactly right,” Beaudry told a news conference.
He did not directly engage in the question of whether Macklem’s work should be at stake. He said the Bank is not involved in politics and prefers to stay in the background.
Beaudry, however, acknowledged the impact that high inflation is having on many Canadians.
“Right now we fully understand that many Canadians can be frustrated by the situation,” he said. “It’s hard for a lot of people. And we haven’t been able to keep inflation on target, so it’s appropriate for people to ask us questions.”
The Bank’s goal is to keep inflation at 2%. It is currently closer to 7%.
And while Poilievre has blamed the Bank’s decisions for inflation, Beaudry said the most important influences on inflation are international: supply chain bottlenecks that arise as the global economy recovers of the pandemic, the war in Ukraine raises the prices of oil, wheat and fertilizers.
Because Canada cannot control the prices of most internationally traded goods, dealing with these forces is tricky, Beaudry said.
Inflation has been surpassing the projections: Beaudry
Beaudry said the Bank is trying to explain to Canadians how it got to the current situation: what aspects it did right and wrong. He said this also involves describing what the Bank is learning from this period and how it plans to control inflation in the future.
He exposed some of these mistakes in a speech at the Gatineau Chamber of Commerce in Gatineau, Que. Thursday. He noted that inflation has not only exceeded the Bank’s targets over the past year, but has consistently exceeded its predictions.
He promised that when the Bank updates its inflation projections in July, it will provide an initial analysis of inflation forecast errors.
Inflation has raised the cost of basic necessities, including many groceries. (Ivanoh Demers / Radio-Canada)
Beaudry also predicted that inflation is likely to rise further in the short term before it begins to ease.
Speaking to reporters, Beaudry also explained some of the challenges facing the Bank in making decisions at a time of volatile global conditions.
While acknowledging that the Bank struggled to predict rising oil and food prices and did not perceive how supply chain problems could also lead to price changes, he said such mistakes are common among those they try to anticipate inflation.
“We believe we have made the best kind of decisions for Canadians at all times because of the information we have,” he said.
Beaudry said reducing inflation is the Bank’s main concern at the moment.
“We need to find ways to get things back to that two percent,” he said. “We’re in it.”
Poilievre’s comments on the Bank of Canada have been criticized. Critics have warned that threats to the Bank of Canada have undermined confidence in the institution and, by extension, in the economy. In response, Poilievre has stated that he is only shaking up “the elites.”
Ottawa’s elites are out of their minds because I would hold them accountable for the harm they have done to the common people.
This is my job. I don’t work for the elites. I work for you, the people, as a servant, not as a master.
Join us. Become a member to vote for me: pic.twitter.com/nBQl56tKFZ
– @ PierrePoilievre
Leadership rival Jean Charest attacked Poilievre for his comments about the Bank during the party’s official English-language debate in May, calling them “irresponsible”.
“Create doubts. If you’re an investor who wants to come to Canada and hear these kinds of statements from a member of the House of Commons, think you’re in a Third World country,” he said.
Conservative candidate for leader Jean Charest says dismissing the governor of the Bank of Canada would be “irresponsible”
Jean Charest says Pierre Poilievre’s claims that the governor of the Bank of Canada should be held accountable for inflation rates and subsequently fired are an “irresponsible” statement for a candidate vying to lead the Conservative Party.
“We can’t afford to have any leader come out here and deliberately undermine confidence in the institutions. Conservatives don’t.”
Charest supporter Ed Fast also attacked Poilievre’s statements to the Bank. Fast resigned as a conservative financial critic shortly after making such statements, alleging that Poilievre’s supporters tried to “gag him” on important issues.