Bank of Canada governor Tiff Macklem navigates a political minefield every time he testifies before the House of Commons finance committee.
Four times a year, members of Parliament get the chance to question the governor on monetary policy.At a time when inflation and interest rates are both high, MPs — particularly Opposition ones — are eager to ask him about politically charged issues.
Is the federal government spending too much? How much is carbon pricing pushing up prices? Would eliminating it bring interest rates down?
Mindful of the weight his words carry, the governor keeps his responses focused on the implications of fiscal policy on inflation.But despite Macklem’s best efforts, his words are often clipped and repackaged by politicians in service of their own narratives.Parliamentary committees have become increasingly polarized over the course of the last two Liberal minority governments and have provided a venue for political theatre outside the House of Commons.
That was on full display Thursday when Conservatives sent out a news release following Macklem’s appearance in committee, which said the governor had “confirmed that Trudeau’s $61 billion in new spending is ‘not helpful’ in bringing inflation down and lowering interest rates.”
Clips on X quickly circulated as well.But what was missing was the fact that Macklem never singled out federal spending.
He noted provinces increased their spending, and it was largely deficit-financed.“That has increased the contribution to growth from government,” Macklem said in response to a question on whether fiscal and monetary policy are rowing in the same direction.Macklem noted the central bank’s April monetary policy report forecasts aggregate government spending will increase by 2.75 per cent this year.
That’s up from its January forecast of 2.25 per cent, largely due to a slew of provincial budgets that increase spending.Notably, the federal budget had not yet been presented when these forecasts were published.“So yeah, that is not helpful in trying to get inflation down,” Macklem said about the increased growth rate for spending by all levels of Canadian government taken together.
The Canadian Press asked the Bank of Canada whether the governor’s response was accurately captured in the Conservative news release.“We’ll let the governor’s testimony speak for itself,” Paul Badertscher, the central bank’s director of media relations, said in an email.The Tories didn’t respond to a question about whether they believe that provincial government spending has contributed to inflation.Instead, they reiterated their interpretation of Macklem’s comments.