Two Premiers Urge Bank of Canada to Halt Interest Rate Hikes
Ontario Premier Doug Ford and British Columbia Premier David Eby have both sent letters to Bank of Canada Governor Tiff Macklem, urging the central bank to halt interest rate hikes leading up to its next rate decision on Wednesday. Premier Ford expressed concern over the “crushing impact of further rate hikes” on families and businesses, echoing Premier Eby’s letter sent earlier in the week.
Christopher Ragan, associate professor and founding director of McGill University’s Max Bell School of Public Policy, commented that while there are people who argue against further interest rate increases, the involvement of premiers brings a political element to the debate. He noted that the Bank of Canada is an independent institution with a mandate from the federal government to maintain a two percent inflation target.
The Bank of Canada has been aggressively raising interest rates since March 2022 in response to high inflation. However, recent signs of a slowdown in the economy, including rising unemployment rates and a contraction in real gross domestic product, have led forecasters to believe that the central bank will hold its key rate steady.
Labour groups and some policy thinkers have opposed the rate hikes, arguing that the negative impact on workers outweighs the benefits. Politicians, including Conservative Leader Pierre Poilievre and NDP Leader Jagmeet Singh, have also voiced their concerns and opinions about the Bank of Canada’s operations.
Ragan suggests that rather than focusing on day-to-day operations, elected officials should debate and establish the Bank of Canada’s mandate. Once the mandate is set, it is important to allow the central bank to carry out its responsibilities.
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