Opinion: On inflation, the Bank of Canada did its job – but politics will stand in the way | Canada News Media
Connect with us

Politics

Opinion: On inflation, the Bank of Canada did its job – but politics will stand in the way

Published

 on

Open this photo in gallery:

Prime Minister Justin Trudeau shakes hands with New Democratic Party leader Jagmeet Singh as Conservative leader Pierre Poilievre looks on at a Tamil heritage month reception in Ottawa, on Jan. 30.Adrian Wyld/The Canadian Press

Theo Argitis is managing director at Compass Rose Group and former Ottawa bureau chief at Bloomberg News.

The Bank of Canada’s pivot in June to a higher-for-longer interest-rate environment represented a meaningful escalation in its fight against inflation. It signals a readiness to risk a recession for the sake of price stability.

But whether federal politicians are as ready to fully get behind the central bank’s efforts is still to be determined – a potential source of uncertainty to the whole endeavour. While bank officials will scoff at the idea they could be swayed by political discourse or pressure, federal leaders have plenty of scope to handicap them.

A monetary tightening of this scale has a much better chance of success with at the very least implicit support from a broad cross-section of Canadian politics. Inflation control is an exercise in expectations management; workers and businesses need to believe it will work in order for it to work.

Furthermore, most Canadians don’t understand the nuances of central bank independence. The messages Canadians get from political Ottawa on the inflation fight matter, and right now all parties are falling short on that front.

The Liberals have been deferential to Governor Tiff Macklem on monetary policy, but they’ve also left him on his own – choosing not to bring other policy levers to the inflation fight. More spending discipline, for example, would ease pressure on the Bank of Canada to increase interest rates. So would temporarily scaling back large increases in international migration that appear to be short-term inflationary.

But the NDP, which is propping up Prime Minister Justin Trudeau’s minority Liberal government, is questioning the merits of Mr. Macklem’s policies outright, arguing that greedy corporations are the culprits behind inflation and that higher borrowing costs are unnecessary. The Conservatives, meanwhile, have done enough damage to the central bank’s credibility by accusing it of being in bed with the Liberals.

It will not get easier for the central bank. Inflation did fall in May, but only to 3.4 per cent. We’re at the start of what the Bank of Canada is warning could be a very long period of tighter monetary policy. Higher borrowing costs spread through the economy with long lags. The full pain of rate increases has yet to be felt, and Mr. Macklem is probably not even done hiking.

Will federal leaders give the Governor much latitude should a major downturn come? Will he remain resolute in the face of any backlash? It’s not a given.

A long time has passed since the political establishment was last tested with an inflation crisis: It was in the early 1990s, at the onset of the Bank of Canada’s adoption of price stability as its primary objective. Even then, with a much more inflation-fatigued electorate, the sharp rate hikes were not without plenty of controversy.

It’s easy to see how a “this time is different” mindset could develop today, or how some politicians could start toying with the idea of making tradeoffs between interest rates and inflation. Political constituencies could form around the idea of tolerating higher inflation to ease interest payment burdens, particularly among highly indebted young people. Generational political fault lines will deepen as higher interest rates trigger a large distribution of income from debtors to savers, and from young to old.

The Bank of Canada, meanwhile, will continue to struggle with credibility issues. Acting as a force of redistribution is an inherently political and uncomfortable position for any central bank to be in.

 

Source link

Politics

Youri Chassin quits CAQ to sit as Independent, second member to leave this month

Published

 on

 

Quebec legislature member Youri Chassin has announced he’s leaving the Coalition Avenir Québec government to sit as an Independent.

He announced the decision shortly after writing an open letter criticizing Premier François Legault’s government for abandoning its principles of smaller government.

In the letter published in Le Journal de Montréal and Le Journal de Québec, Chassin accused the party of falling back on what he called the old formula of throwing money at problems instead of looking to do things differently.

Chassin says public services are more fragile than ever, despite rising spending that pushed the province to a record $11-billion deficit projected in the last budget.

He is the second CAQ member to leave the party in a little more than one week, after economy and energy minister Pierre Fitzgibbon announced Sept. 4 he would leave because he lost motivation to do his job.

Chassin says he has no intention of joining another party and will instead sit as an Independent until the end of his term.

He has represented the Saint-Jérôme riding since the CAQ rose to power in 2018, but has not served in cabinet.

This report by The Canadian Press was first published Sept. 12, 2024.

The Canadian Press. All rights reserved.

Source link

Continue Reading

Politics

‘I’m not going to listen to you’: Singh responds to Poilievre’s vote challenge

Published

 on

 

MONTREAL – NDP Leader Jagmeet Singh says he will not be taking advice from Pierre Poilievre after the Conservative leader challenged him to bring down government.

“I say directly to Pierre Poilievre: I’m not going to listen to you,” said Singh on Wednesday, accusing Poilievre of wanting to take away dental-care coverage from Canadians, among other things.

“I’m not going to listen to your advice. You want to destroy people’s lives, I want to build up a brighter future.”

Earlier in the day, Poilievre challenged Singh to commit to voting non-confidence in the government, saying his party will force a vote in the House of Commons “at the earliest possibly opportunity.”

“I’m asking Jagmeet Singh and the NDP to commit unequivocally before Monday’s byelections: will they vote non-confidence to bring down the costly coalition and trigger a carbon tax election, or will Jagmeet Singh sell out Canadians again?” Poilievre said.

“It’s put up or shut up time for the NDP.”

While Singh rejected the idea he would ever listen to Poilievre, he did not say how the NDP would vote on a non-confidence motion.

“I’ve said on any vote, we’re going to look at the vote and we’ll make our decision. I’m not going to say our decision ahead of time,” he said.

Singh’s top adviser said on Tuesday the NDP leader is not particularly eager to trigger an election, even as the Conservatives challenge him to do just that.

Anne McGrath, Singh’s principal secretary, says there will be more volatility in Parliament and the odds of an early election have risen.

“I don’t think he is anxious to launch one, or chomping at the bit to have one, but it can happen,” she said in an interview.

New Democrat MPs are in a second day of meetings in Montreal as they nail down a plan for how to navigate the minority Parliament this fall.

The caucus retreat comes one week after Singh announced the party has left the supply-and-confidence agreement with the governing Liberals.

It’s also taking place in the very city where New Democrats are hoping to pick up a seat on Monday, when voters go to the polls in Montreal’s LaSalle—Émard—Verdun. A second byelection is being held that day in the Winnipeg riding of Elmwood—Transcona, where the NDP is hoping to hold onto a seat the Conservatives are also vying for.

While New Democrats are seeking to distance themselves from the Liberals, they don’t appear ready to trigger a general election.

Singh signalled on Tuesday that he will have more to say Wednesday about the party’s strategy for the upcoming sitting.

He is hoping to convince Canadians that his party can defeat the federal Conservatives, who have been riding high in the polls over the last year.

Singh has attacked Poilievre as someone who would bring back Harper-style cuts to programs that Canadians rely on, including the national dental-care program that was part of the supply-and-confidence agreement.

The Canadian Press has asked Poilievre’s office whether the Conservative leader intends to keep the program in place, if he forms government after the next election.

With the return of Parliament just days away, the NDP is also keeping in mind how other parties will look to capitalize on the new makeup of the House of Commons.

The Bloc Québécois has already indicated that it’s written up a list of demands for the Liberals in exchange for support on votes.

The next federal election must take place by October 2025 at the latest.

This report by The Canadian Press was first published Sept. 11, 2024.

The Canadian Press. All rights reserved.

Source link

Continue Reading

Politics

Social media comments blocked: Montreal mayor says she won’t accept vulgar slurs

Published

 on

 

Montreal Mayor Valérie Plante is defending her decision to turn off comments on her social media accounts — with an announcement on social media.

She posted screenshots to X this morning of vulgar names she’s been called on the platform, and says comments on her posts for months have been dominated by insults, to the point that she decided to block them.

Montreal’s Opposition leader and the Canadian Civil Liberties Association have criticized Plante for limiting freedom of expression by restricting comments on her X and Instagram accounts.

They say elected officials who use social media should be willing to hear from constituents on those platforms.

However, Plante says some people may believe there is a fundamental right to call someone offensive names and to normalize violence online, but she disagrees.

Her statement on X is closed to comments.

This report by The Canadian Press was first published Sept. 11, 2024.

The Canadian Press. All rights reserved.

Source link

Continue Reading

Trending

Exit mobile version