Columnist image
Noah Zivitz

Managing Editor, BNN Bloomberg


For the second time in less than a week, David Dodge is dismissing a front-running Conservative Party of Canada leadership candidate’s view on monetary policy and the central bank.

“The issue is so simple that there is not a lot to discuss,” wrote Dodge, who was the Bank of Canada’s governor from 2001 to 2008, in an email to BNN Bloomberg about Pierre Poilievre’s threat to fire Governor Tiff Macklem if he takes office.

Dodge pointed to the agreement between the government and the bank on the central bank’s mandate (ie, maintaining inflation in a range of one to three per cent), and said its independence is enshrined insofar as being “charged with making the operational decisions on achieving this target.”

It was a more mild-worded retort than his previous commentary about Poilievre.

“That’s bull----. I’m very insulted by that,” Dodge said in an interview on CTV’s Question Period on Sunday when asked about Poilievre’s claim that the central bank is “financially illiterate.”

Poilievre, an Ontario MP who previously served as the Conservatives’ finance critic and has routinely attacked the Bank of Canada’s pandemic-era asset purchases, fanned the flames in the party’s first official leadership debate.

“The Bank of Canada governor has allowed himself to become the ATM machine of this government. And so I would replace him with a new governor who would reinstate our low-inflation mandate, protect the purchasing power of our dollar, and honour the working people who earn those dollars,” he said in the debate Wednesday night.

The Bank of Canada and the federal government renewed the central bank’s inflation target last December for another five-year term through Dec. 31, 2026. The agreement mandates that the bank aim for inflation at the mid-point of a one to three per cent band.

As far as Dodge is concerned, that’s that.

“If the bank and the government cannot agree on the wording of that agreement, the democratically elected government can force its views on the appropriate target. But once the agreement is in place, the bank has full operational responsibility,” he wrote in his email.

The Bank of Canada Act requires the Bank of Canada’s governor and the finance minister to “consult regularly on monetary policy and on its relation to general economic policy.” It goes on to state that if there’s a difference of opinion over monetary policy, the finance minister could hand the bank a written directive that must be followed. That step would only be possible after approval of the Governor in Council.

As for the possibility of dismissing the central bank’s leaders, the Bank of Canada Act simply states that the governor (and deputy governor) “shall each be appointed for a term of seven years during good behaviour.”

“The independence of the Bank of Canada from the government of the day is a really important principle that ensures the stability and the good reputation of Canada in international economic circles,” Prime Minister Justin Trudeau said Thursday afternoon when asked about Poilievre’s threat to fire Macklem and the broader politicization of the bank.

“The fact that one of the leading candidates for the Conservative Party of Canada, the leader of the opposition, seems to profoundly either misunderstand that or not care about the facts at all is somewhat disappointing in an era where we need more responsible leadership, not less.”

Macklem started his seven-year term as governor on June 3, 2020.

“It’s not the bank’s role to comment on political debates,” wrote Paul Badertscher, the Bank of Canada’s director of media relations, via email when asked about Poilievre’s comments.

With files from BNN Bloomberg’s Ian Vandaelle