© Reuters. FILE PHOTO: Governor of the Bank of Canada Tiff Macklem walks outside the Bank of Canada building in Ottawa, Ontario, Canada June 22, 2020. REUTERS/Blair Gable/File Photo
(Reuters) – Bank of Canada Governor Tiff Macklem was quoted in a published report on Sunday saying that he feels no threat to the institution’s independence, even as it comes under intense scrutiny from politicians, economists and even the general public.
The Bank of Canada (BoC) has hiked interest rates by 350-basis points in just seven months, one of its sharpest tightening campaigns ever, to try to force inflation back down to its 2% target from 6.9% in September.
The combination of high interest rates and inflation has squeezed Canadian consumers and small businesses, prompting politicians, unions and even some economists to implore the central bank to slow its pace of tightening.
“I do not have any concerns about the bank’s independence being under threat,” Macklem was quoted saying in an interview with The Canadian Press. The remarks were published online on Sunday but the interview was conducted on Wednesday, The Canadian Press said.
“Yes, we’re getting lots of tough questions. People should be asking those tough questions. But I have felt no threat to our independence.”
The bank this week signaled its tightening campaign was nearing its peak, but made clear it was not done yet, as it hiked rates by 50-bps to a fresh 14-year high.
Macklem has argued restoring price stability was not easy, but rampant inflation would be worse.
Canada, with its pricey homes and top of the G7 household debt levels, is particularly sensitive to higher interest rates, with fears mounting the BoC’s aggressive hikes will trigger a recession.
In his interview with The Canadian Press, Macklem acknowledged: “Lots of people are giving us advice on what we should do.”
But he said central banks are independent for a reason.
“The reason is that there are tough decisions to take, and you do have to look longer term. And it’s at times like this, that when it’s difficult, that you see the value of the independence of central banks,” he told The Canadian Press.