As it happens6:38Jagmeet Singh says raising interest rate won’t bring it down
The leader of the NDP is questioning the decision-making of Canada’s central bank and calling on the governing Liberals to do more to combat the rising cost of living.
The Bank of Canada announced on Wednesday that it was raising its benchmark interest rate by 50 basis points to 3.75% in a bid to combat rising inflation by encouraging Canadians to spend and borrow less. .
This rate is the amount retail banks have to pay for short-term loans, but it ripples through the economy by influencing the rates Canadians get from their own lenders on things like savings accounts and mortgages.
Earlier this week, Jagmeet Singh said the central bank’s approach to fighting inflation had “absolutely no merit”. According to the Toronto Starhe also wrote a letter to Prime Minister Justin Trudeau calling on the Liberal government to do more to address rising food and energy costs.
Here is part of his conversation with As it happens the host Nil Köksal.
When we look at other countries and compare Canada to them, Canada has managed to keep inflation in the single digits [and] even lowering it by one percent since June. So what makes you doubt the Bank of Canada’s decision-making here?
First of all, we know there will be a lot of pain with this very sharp and dramatic increase in interest rates…for a lot of families. They are looking at their mortgages and wondering if they can afford to keep their house. So that’s a big concern.
The second factor is that many economists point out that with this quick and brief rise in interest rates in such a short time, there is a very high probability of triggering a recession. And that will mean potentially hundreds of thousands of lost jobs in our country.
The Bank of Canada is independent, but its mandate is set by the Government of Canada. We therefore call on the Liberals to have a healthier approach to this problem. They can’t just sit idly by and let the Bank of Canada be the one to respond to inflation. The Liberal government has a role to play.
You said earlier this week there was ‘zero evidence’ to justify the rate hikes like the one we saw today [and] “there is absolutely no merit” to this approach… There was a lot of concern that you made such strong statements, because of the independence of the Bank, as you mentioned, but also because it is… an economic approach that worked.… Do you stand by this statement that there is no evidence to justify the rate hikes that the Bank of Canada is bringing?
I have to accept and I recognize that the increase in the interest rate has certainly lowered housing somewhat. There has been downward pressure on housing. So I recognize him.
But in terms of the other factors that really impact people’s lifestyles, the cost of living pressures that people are feeling – gasoline, energy cost, food cost – none of these things will be affected in a real, direct way by raising interest rates.
The Bank of Canada, of course, does not control things, including food prices, as you mentioned. What would you and an NDP government do, potentially, to bring down inflation or to bring down the cost of the things you just listed?
That’s why…we asked for a food price survey. And we actually forced all parties to agree to our plan, which is a parliamentary-level food price inquiry.
We asked the Competition Bureau to also examine potential price fixing, given the high profits of private sector grocery stores. There are bonuses for CEOs and… the workers are not paid more. Producers are not paid more. But the profits certainly increase.
We actually provide real solutions to fix the problems. And we say the Liberal government must do more.
WATCH | How do rate hikes affect you?
In question period earlier today, the Prime Minister highlighted what he says his government has done–targeted assistance, as he said, the GST credit news we received recently, [and] dental care too. They say they are doing what they can right now.
Each of these measures are things we fought for and made the government do. So, of course, we are proud of the work we did to make dental care a reality when the Liberal government voted against it more than twice over a year ago.
Every action taken right now is a direct result of New Democrats. We are saying that the Liberal government must redouble its efforts to step in and offer help and a plan to Canadians who are worried about the future.
You have the option to stop supporting this minority government. And if you have the impression that the Liberals are dragging us into a recession, why are you continuing to support this government?
We always have the possibility to withdraw our support and we are aware of it. And we understand how powerful this tool is, and also the danger of this tool – that it would plunge a country into an election.
But we focused more on: how to force this government to do what is necessary? And I give the example of the current legislative program which has been led by the New Democratic Party. Dental aids, rental aids and GST rebates, the three big things the government talks about, are all specifically and exclusively because of us. We are forcing the government to do these three things.
So we want to continue to use our influence to help Canadians. We are not here for the selfish purpose of simply calling an election when it suits us politically. We want to make sure we make the right decision for the country and for the people. And right now calling an election would be a very serious decision to make. And we wouldn’t unless there was no other recourse.
We heard from the Conservative leader Pierre Polevre said he would fire [Bank of Canada governor] Tiff Macklem. Are you concerned about these kinds of statements and what they signal to Canadians?
I agree with the concerns raised by Canadians about the removal of the Governor of the Bank of Canada. It clearly undermines the independence of an institution to come in and turn your head. It’s wrong.
But ensuring that the Government of Canada establishes the appropriate mandate for the Bank of Canada is absolutely something that politicians and political leaders should be doing.
The decisions they make are decisions we should be able to criticize and question, and the fact that their approach to managing inflation does not address the main causes of inflation, the war in Ukraine [or] supply chain issues that have led to what we are experiencing as inflation.
These are legitimate concerns and criticisms that should be raised, and I think it is appropriate to raise them.
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