Bank of Canada Governor Tiff McClem welcomes criticisms of Conservative leader candidate Pierre Poirievre and the central bank from elected officials and knows that inflation is too high. Shrugged.
McClem told reporters at a press conference after the Bank of Canada’s financial system review was announced, identifying potential economic threats over the next year and not addressing Poirievre’s criticism head-on. Said.
As a public institution, “We welcome diverse views. We welcome analysis. We welcome criticisms of our work and decisions. We do it ourselves.” He said.
See: Bank of Canada Governor Responds to Poilievre’s Threat
In his fight for the party’s best job, Poilievre emerged as a fierce critic of the Canadian Central Bank. He sought to link decades of high inflation to the COVID era’s policy of quantitative easing, and recently accused financial institutions of being “economically illiteracy.”
Poilievre said the government he leads will extend the authority of the Audit President to include the Bank of Canada and promote a review of its pandemic policy.
At a conservative leaders debate last month, Poirievre said he would dismiss McClem if he became prime minister. This is a promise that has sparked criticism that Conservative parliamentarians have always unfairly politicized the institutions that run out of the party. Politics.
Poilievre then doubled, accusing banks of “printing money” through quantitative easing and helping the Liberal Party government’s pandemic-related spending.
“The Ottawa elites put beside them to detain them to explain the harm they have done to the everyday people. That’s my job. I don’t work for the elite. Hmm. I work as a servant for you, people, not a master. “
Asked about Poirievre’s promise to unemploy him, McClem said, “I’m going to leave politics to politicians.”
However, he defended the World Bank’s actions during the pandemic crisis.
McClem said that as financial markets “frozen”, quantitative easing policies, the process by which central banks “print” more money to buy assets such as government and corporate bonds held by banks and other institutions. He said it was wise to pursue.
As many other central banks did during the Great Recession of the late 2000s, the World Bank adopted quantitative easing to increase lending and spending during the period of financial panic. The policy ended in October 2021.
The World Bank’s move to buy these bonds has provided very necessary liquidity during uncertain times, McRem said.
“We did it on a large scale and it worked,” he said. “Financial markets unfrozen relatively quickly, which was the key to preventing a very serious recession from becoming a recession.
“We provided extraordinary monetary policy support to put the floor under the most severe recession ever needed to support recovery, and it worked. How many are we now? I have a new challenge. “
The economy “needs higher interest rates” — Macklem
McClem said he understands the seriousness of the current inflation surge. The World Bank’s goal is to keep inflation at 2%. Currently, it’s close to 7 percent. He said the World Bank is ready to raise interest rates further to cool the heated economy.
“We believe the economy can handle higher interest rates. We need higher interest rates,” he said.
A few Prominent economist Banks and their US equivalent, the Federal Reserve Board, have criticized the treatment of inflation, arguing that these institutions may have moved faster to raise interest rates.
Instead, McClem and his US counterpart Jerome Powell described the price surge in the economy as a whole as follows:temporary“—Something that declines relatively quickly as the pandemic disappears. The theory is not pandemic.
“If you had full wisdom, you would have returned, and we should have raised the price a little earlier,” Powell said in a recent interview with NPR.
“I don’t know how much difference it made, but I needed to make real-time decisions based on that knowledge and did my best.”
Bank of Canada official warns about cryptocurrencies
In a presentation Thursday, Carolyn Rogers, senior vice president of the Bank of Canada, identified cryptocurrencies, an investment product defended by Poilievre, as a point of “vulnerability” in the Canadian economy.
Earlier this year, Poilievre said Canadians could “opt out” of inflation by pouring money into assets like Bitcoin. The proposal prompted criticism from leadership rivals that if Canadians listened to Poilievre, they would pay a lot of money. Bitcoin prices have fallen about 50% from their November 2021 highs.
Like other speculative assets, Rogers said Bitcoin is “vulnerable to significant and sudden price declines.”
“Risks may not be well understood by investors,” she said.