The central bank should steer clear of "ideological" positions, Conservatives say
Federal Conservatives called on the Bank of Canada to temper its support of “Trudeau’s insatiable spending appetites,” saying that the central bank should restrict its focus to immediate pandemic emergency measures.
Pierre Poilievre PC MP, who serves as the Conservatives’ chief spokesman on finance, said that the BoC “should not be an ATM” for Trudeau.
The party said that the bank has implemented policies that are skirting dangerously close to “ideological” stances, and has become the de facto primary financier of the prime minister’s pet projects.
As estimated by the International Monetary Fund, Canada’s government budget deficit will run to almost 20% of GDP by year-end, the fourth highest shortfall globally.
Aside from the imposition of quantitative easing, the central bank has purchased roughly $168 billion in government bonds since the COVID-19 pandemic took hold of the Canadian financial system.
“We will be watching the Bank of Canada with great scepticism,” Poilievre said in an interview with Bloomberg. “If the Bank of Canada does want to start getting more and more political, then it will be held to the same level of political accountability as other political entities.”
Poilievre also slammed the Liberals’ current strategy, which he said is only making the rich richer through inflated asset values.
“The world is completely revolutionized, so we’re told, and so the logic goes that governments can just print money to pay their bills and there’ll be no consequences. It’s insane,” Poilievre said. “Expanding the bank’s balance sheet during a short-term, once-in-a-lifetime pandemic lockdown is different than perpetually buying and inflating the financial assets of the wealthy at everyone else’s expense.”
Industry players are sceptical of the Conservatives’ thesis, however.
“I don’t think we’re at a point, and I don’t anticipate we’ll be at a point, where there is the question about central bank credibility,” said Jean-Francois Perrault, chief economist at Bank of Nova Scotia. “The central bank is independent by law, they have a very specific objective – to target inflation – and I think the governor has made it very, very clear that that’s sacrosanct.”
