In July 2020, the governor of the Bank of Canada said so.
“If you have a mortgage or are thinking of making a major purchase […]you can rest assured that rates will stay low for a long time.
Canadians were being told that, despite the economic uncertainty associated with the pandemic, it was safe to go into debt.
Many trusted them.
This has contributed to a housing bubble and the housing crisis we are experiencing today.
And he gave arguments to Justin Trudeau, who would not have missed the opportunity to spend, to inject unprecedented sums of money into the economy, through business aid and CERB. These programs were certainly needed, but their extent is debatable.
Two years later, the Bank of Canada announces a seventh hike in its key rate.
Today, Canadians are experiencing these rising rates.
This translates today into bankruptcies, second jobs, hardships, citizens deeply in debt. Yes, sometimes out of recklessness, but also because they trusted the system.
One of the culprits, whether we like it or not, is the Bank of Canada.
It is not the only central bank that has failed the prudence test. Even the US Federal Reserve has called inflation “transient”.
The Bank of Canada should still apologize for its mistakes, as did the Governor of the Reserve Bank of Australia.
He has encouraged debt and an unprecedented injection of public money into the economy, and this is now turning against the citizens who suffer from his bad decisions.
The politician
Politically, both Jagmeet Singh and Pierre Poilievre are now open critics of the Bank of Canada. The PQ PSPP also blamed her.
Some believe it is a dangerous game for politics to interfere with central banks, which must remain independent. It’s true.
Only the Bank of Canada is an institution that is not above criticism. When you listen to it, it gives the impression of the banker in his ivory tower, trying, like a cold scientist, to bring inflation back to 2%, without caring about the effects his horse remedy creates on people’s lives.
Of course, where there’s frustration available, there’s politics.
Today the fault lies with the Trudeau government, partly deserved for its tendency to cut corners. Singh and Poilievre want to channel that discontent.
A Léger poll clearly demonstrates this market of dissatisfaction with the federal government: 64% of Canadians believe that the Trudeau government has not taken adequate steps to deal with inflation. Huge!
Canadians also blame their provincial government heavily.
One exception: here in Quebec. The Legault government is the least criticized of all the provinces for its handling of inflation.
Its anti-inflation shield, materialized in recent days, is a breath of fresh air appreciated by Quebecers.
The majority is supported by the Legault government. Which is both good and bad. Good, because the state must be present in times of uncertainty. Bad, because we diverge too much and do not reach enough the citizens deeply affected by inflation.
This cabinet remains Teflon.
Even when things go wrong, things go right for the Legault government.
