Poilievre blames Trudeau after Bank of Canada hikes interest rate again
Trudeau says Ottawa is stepping up with targeted support
Conservative Leader Pierre Poilievre blamed Prime Minister Justin Trudeau for the Bank of Canada's decision to raise interest rates again Wednesday, saying government spending has fuelled inflation.
The central bank hiked its overnight rate by 25 basis points to five per cent — a move meant to tamp down persistent inflation in an economy that's still performing relatively well despite a series of disruptive global events.
The bank's decision will push up the cost of borrowing money. That means homeowners with variable-rate mortgages and consumers with car loans will need to dig a little deeper to pay their bills. Businesses also will have to spend more to get cash — costs that could be passed on to consumers.
"After eight years of Trudeau, life costs more. The culprit is Justin Trudeau," Poilievre said at a campaign-style stop in Penticton, B.C.
"Trudeau promised Canadians that they didn't have to worry about higher interest rates. His policies forced the Bank of Canada to deliver an uppercut to Canadian families who are drowning in debt."
Asked about interest rates in June 2020, Trudeau said they're at "historic lows" and tried to reassure Canadians about big government spending. Also in 2020, Tiff Macklem, the governor of the Bank of Canada, said interest rates "are going to be unusually low for a long time."
The bank operates independently of the government of the day.
The bank's mandate is to achieve price stability — low inflation — and one of its few tools to accomplish that goal is rate hikes.
Poilievre has been blaming government spending for the wave of inflation that has washed over Canada in the last two years.
Trudeau and his finance minister, Chrystia Freeland, have said COVID aftershocks and the ongoing war in Ukraine are to blame for inflationary pressure in much of the Western world.
Economists largely agree that stimulus spending during the health crisis did have an impact on inflation — consumers flush with cash chasing scarce goods pushed prices — but extraordinary government spending wound down long ago and the inflation issues are now largely fuelled by other causes.
Canada appears to be on the winning side of the inflation fight, according to OECD data. Canada, the U.S. and Japan have seen prices grow less year-over-year than other G7 countries.
The cost of energy has come down considerably and the inflation rate on food and other items has stabilized in Canada and the U.S.
In the United Kingdom, France and Germany, for example, inflation is still persistently high.
Despite those apparent gains, Macklem said the country can't afford to ease up. He said robust consumer demand and tight labour markets demand higher interest rates to push inflation lower and hit the bank's 2 per cent target.
"We've been clear about the indicators we are watching and it's clearly too early to be talking about interest rate cuts," Macklem said during a Wednesday mid-morning news conference.
"We are certainly trying to balance the risks of over- and under-tightening and we'll be taking it one meeting at a time," he added.
Trudeau acknowledged the bank's decision isn't what many Canadians want to hear. But he framed the issue as a global one that's not unique to Canada.
"I've had conversations with leaders here in Europe and around the world and the cost of living is a real challenge," he said. "People around the world are facing significant challenges."
Trudeau said his government is "stepping up with targeted support for people who most need it at this moment." He pointed to the government's GST rebate — which has been branded politically as a "grocery rebate" — as one of those measures.
Poilievre said a government led by him would "axe the carbon tax" and rein in government spending as part of a push to get inflation under control.
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