Nojoud Al Mallees
Governments looking to ease inflation for Canadians should choose well-targeted, temporary measures, said Bank of Canada Governor Tiff Macklem.
At a House of Commons committee meeting on Wednesday, Conservative MP Adam Chambers asked the governor which of two options was the best way to provide relief without fueling inflation: direct transfers to low-income Canadians or energy assistance programs.
In response, the governor said targeted and temporary measures fuel inflation less than broad-based measures.
“Policies aimed at mitigating the effects of inflation on citizens really need to be targeted, targeted at the most vulnerable, and temporary, temporary while this is an inflation problem,” Macklem said.
soften the blow
Federal and provincial governments have responded to high inflation with measures to soften the blow to Canadians’ finances. While some measures have targeted low-income people, others have been generalized.
The federal government recently temporarily doubled the GST rebate, a benefit that benefits low- and modest-income Canadians.
Provinces also provided relief, with many opting to send checks more widely.
More recently, Alberta Premier Danielle Smith announced a series of inflation-fighting measures on Tuesday, which include payments of $600 per child for families earning less than $180,000 a year. The same income threshold and benefit apply to seniors.
WATCH | Macklem on how the bank will fight inflation:
Macklem, along with Senior Deputy Governor Carolyn Rogers, answered questions from members of the House of Commons Standing Committee on Finance.
Bank of Canada officials have been asked about the central bank’s policy decisions in the face of high inflation for decades.
In October, the annual inflation rate was 6.9%, down from a peak of 8.1% reached in June.
Since March, the Bank of Canada has raised interest rates six times in a row and is expected to announce another rate hike in December.
Singh makes a rare appearance on the committee
Party leaders don’t usually sit on committees, but the NDP’s Jagmeet Singh — who was central bank criticism in recent weeks – made a rare appearance to ask questions of Macklem face to face.
Singh asked if the Bank takes into account the burden that Canadians will bear due to higher interest rates when making their decisions.
“How much pain is too much pain?” Singh asked.
Macklem said he realizes the bank’s actions are having an impact on Canadians, but that if it doesn’t raise interest rates to bring inflation down, the results would be much worse.
“We don’t want to make it more difficult than necessary,” he said.
Conservative leader Pierre Poilievre – who has said he would fire Macklem if the Tories form government – did not join Singh on the committee. But Tory MPs in attendance questioned decisions made by the bank in recent years, including measures taken to stimulate the economy at the height of the pandemic.
In response, Macklem said the measures were leading to a strong recovery, but in hindsight he would have tried to tackle inflation sooner.
“If we knew a year ago everything we know today, yes, I think we should have started tightening interest rates sooner,” he said.