BoC won't be able to raise rates as much as the Fed, negatively impacting the loonie: Strategist
The Bank of Canada acknowledged that pandemic policies and the recent surge of inflation are testing the public’s trust in the institution, in a speech by the central bank’s No. 2 official that sought to underscore its independence from both politics and commercial interests.
Senior Deputy Governor Carolyn Rogers, in her first speech since taking the post in December, outlined in detail the ways she claims the central bank is protected from political interference or influence from the private banking sector, and noted how the Bank of Canada is accountable and transparent with the public.
That independence and accountability will inform how the central bank plans to tackle the current surge of inflation, Rogers said.
“Just as Canadians trusted us to respond with strength and conviction when the economy needed support at the onset of the pandemic, they are counting on us now to lower inflation,” Rogers said, according to prepared remarks. “We take that trust seriously. We have the tools, we have the track record, and we are committed to getting inflation back to target.”
Rogers reiterated recent language from the Bank of Canada, saying that while global pressures have been the primary driver of inflation, the economy is beginning to overheat and the central bank will need to raise interest rates “higher still.”
The speech -- titled “The Bank of Canada: A matter of trust” -- comes amid criticism from some members of the main opposition Conservative Party who have blamed the central bank for the higher inflation.
Pierre Poilievre, the front-runner in the race to lead the Conservatives, held a press conference last week pledging to increase parliamentary oversight of the central bank, adding that he’d also halt policymakers’ work on a digital currency.
“We are acutely aware that, with some of the extraordinary actions we have taken during the pandemic and with inflation well above our target, some people are questioning that trust,” Rogers said.
She acknowledged -- as Governor Tiff Macklem has in recent weeks -- that “there were some things we got wrong”. The persistence of supply chain disruptions “surprised us,” Rogers said, citing Russia’s invasion of Ukraine and China’s renewed lockdowns.
“These are things we didn’t foresee,” Rogers said. “We know we have a ways to go before Canadians can fully judge the success of our actions.”