The Bank of Canada must remain independent but should also look to minimize job losses in a possible recession, NDP Leader Jagmeet Singh said Tuesday, clarifying recent comments on the role of the central bank.
The bank’s policy rate has jumped three percentage points this year and is expected to rise again on Wednesday. Rising interest rates intentionally take steam out of the economy in hopes of lowering demand and easing inflation, but come alongside growing calls for a possible recession next year as the global economic picture darkens.
“The aggressive sharp increase in interest rates does mean people are going to hurt. Put bluntly, it’s going to mean a very likely recession where hundreds of thousands of Canadians are going to lose their jobs,” Singh said Tuesday.
His comments come following media interviews over the weekend in which he criticized the central bank’s approach to tackling inflation.
The leader of the federal NDP told CTV’s Question Period on Sunday that there is “absolutely no merit” to the Bank of Canada’s rate-hike strategy as Canadian wages have not kept pace with surging price growth, as was the case in previous inflationary periods.
Singh clarified Tuesday that the NDP “believe fundamentally in the institution’s independence” but called for an expansion to the government-set mandate for the central bank.
“The inflation target alone can’t be the mandate. It should also consider maximum employment,” he said.
The Bank of Canada’s current mandate, renewed in December 2021, focuses on price stability and making sure inflation is low, stable and predictable with a target of two per cent. The mandate does include language to consider “maximum sustainable employment” in the bank’s decision making but it is not a primary goal.
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Singh noted that some of the most acute inflation pains such as food and gas prices are not affected by the Bank of Canada’s policy rate. A possible economic downturn would be a “self-inflicted recession,” he added.
Singh called on the Liberal government to expand the Employment Insurance (EI) program ahead of a possible recession, introduce a corporate windfall tax and waive GST on home heating this winter to make the cost of living more affordable for Canadians.
“Our concern is the government of Canada is again sitting back and accepting that a recession is inevitable,” he said.
“We need to focus on some of the things that Canada can control.”
More to come.
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