The Governor of the Bank of Canada, Tiff Macklem, has issued a warning about the potential risk to the bank's operational independence from political requests to halt interest rate hikes. This comes after premiers of Ontario, British Columbia, and Newfoundland and Labrador publicly appealed for the bank to refrain from increasing its key interest rate. Ontario Premier Doug Ford (NYSE:F) has been particularly vocal on this issue, repeatedly posting on Platform X (formerly Twitter) ahead of Wednesday's announcement.
Macklem acknowledged that higher interest rates pose challenges, but emphasized their crucial role in combating inflation. As of September, inflation stood at 3.8% and disproportionately affects society's most vulnerable. Amid a weakening economy and easing inflation, the Bank is expected to maintain its key rate.
The debate over interest rates comes amid heightened political scrutiny of the Bank following Canada's highest inflation levels in 40 years post-pandemic. Conservative Leader Pierre Poilievre had pledged to fire Macklem over these inflation concerns, while the NDP suggested the federal government could ask the Bank to stop raising rates. Finance Minister Chrystia Freeland faced backlash for her comments describing the bank's decision to hold its key rate steady as "welcome relief."
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