The deputy governor of the Bank of Canada acknowledged Thursday the institution has been unable 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 claim last month that Bank of Canada governor Tiff Macklem was “surrendering his independence” to Prime Minister Justin Trudeau through a “money-printing” quantitative easing program in response to the pandemic- driven economic crisis.
During the party’s official English-language debate in Edmonton, Poilievre also said he would fire Macklem if he became prime minister.
Beaudry was asked by reporters Thursday to respond to those remarks.
“The aspect that we should be held accountable is exactly right,” Beaudry told a news conference.
He did not engage directly with the question of whether Macklem’s job ought to be on the line. He said the bank is not in the business of politics and prefers to remain in the background.
Beaudry did, however, acknowledge the impact of high inflation is having on many Canadians.
“Right now we completely understand that lots of Canadians can be frustrated at the situation,” he said. “It’s difficult for a lot of people. And we haven’t managed to keep inflation at our target, so it’s appropriate people are asking us questions.”
The Bank’s goal is to keep inflation at 2 per cent. Currently it’s closer to 7 per cent.
And while Poilievre has blamed the Bank’s decisions for inflation, Beaudry said the most significant influences on inflation are international — supply chain bottlenecks emerging as the global economy recovers from the pandemic, the war in Ukraine driving up prices for oil, wheat and fertilizer.
Because Canada can’t control the prices of most internationally traded goods, dealing with these forces is tricky, Beaudry said.
Inflation has been blowing past projections: Beaudry
Beaudry said the Bank is trying to explain to Canadians how it got into the current situation — which aspects it got right and got wrong. He said that also involves describing what the Bank is learning from this period and how it plans to control inflation going forward.
He laid out some of those errors in a speech to the Gatineau Chamber of Commerce in Gatineau, Que. on Thursday. He noted that inflation hasn’t just been higher than the Bank’s targets over the past year — it has consistently exceeded its predictions.
He promised that when the Bank updates inflation projections in July, it will provide an initial analysis of the inflation forecast errors.
Beaudry also predicted that inflation is likely to rise even higher in the short term before it begins to ease.
Speaking to reporters, Beaudry also explained some of the challenges the Bank faces in making decisions during a time of volatile global conditions.
While he acknowledged the bank struggled to predict price increases for oil and food and didn’t perceive how supply chain issues could also lead to price changes, he said such errors are commonplace among those trying to anticipate inflation.
“We think we’ve taken the best type of decisions for Canadians at each point for the information we had,” he said.
Beaudry said bringing inflation down is the Bank’s main concern right now.
“We have to figure out ways of bringing things back down to that two percent,” he said. “We’re on it.”
Poilievre’s comments about the Bank of Canada have come under fire. His critics have warned that threats directed at the Bank of Canada undermine trust in the institution and, by extension, the economy. In response, Poilievre has claimed that he’s just rattling “the elites.”
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 servant, not master.
Leadership rival Jean Charest attacked Poilievre over his comments about the Bank during the party’s official English language debate in May, calling them “irresponsible.”
“It creates doubt. If you’re an investor looking at coming to Canada and you hear that kind of a statement coming from a member of the House of Commons, you’d think you were in a Third World country,” he said.
“We cannot afford to have any leader that goes out there and deliberately undermines the confidence in institutions. Conservatives do not do that.”
Ed Fast, a Charest supporter, also attacked Poilievre’s statements on the bench. Almost resigned as Conservative finance critic soon after making those remarks, claiming Poilievre supporters tried to “muzzle” him on important issues.