Analysis-Trudeau foe attacks Bank of Canada in party leadership bid
2022.05.15 16:07
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FILE PHOTO: Bank of Canada Governor Tiff Macklem takes part in a news conference in Ottawa, Ontario, Canada April 13, 2022. REUTERS/Blair Gable/File Photo
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By Steve Scherer and Julie Gordon
OTTAWA (Reuters) – The front-runner to head Canada’s Conservatives and likely challenger to Liberal Prime Minister Justin Trudeau is staging a rare series of attacks on the central bank as inflation soars, in a strategy to win party leadership that could hurt his chances in a general election.
Since February, Pierre Poilievre, a bespectacled 42-year-old suburban Ottawa lawmaker dubbed “Skippy” for his youthful enthusiasm, has marched ahead in the Conservative leadership race by tapping into angst over pandemic restrictions and vaccine mandates.
Instead of targeting any of his five opponents in the leadership race, Poilievre (poh-LEE-ev) has made his attack of the central bank a cornerstone of his campaign as inflation surges to a three-decade high.
But his threat last week to fire Bank of Canada Governor Tiff Macklem if he wins a national election drew criticism from both inside and outside the party.
Former Bank of Canada Governor David Dodge said Poilievre’s onslaught may win him Conservative leadership but would not help him become prime minister.
“Is (Poilievre) damaging the central bank? I don’t think so,” Dodge told Reuters. “Is he damaging himself as a potential prime minister? Absolutely.”
A minister in former Prime Minister Stephen Harper’s government, Poilievre is tapping into Canada’s populist right by blaming “elites” and “gatekeepers” for high living costs while pledging to make Canada “the freest country on earth.”
While economists credit Bank of Canada’s record-low interest rates and aggressive bond-buying program for keeping the economy afloat during pandemic lockdowns, Poilievre says the central bank has become “Trudeau’s ATM” and blames the policies for hot inflation.
The bank has ended its bond-buying program and is in the process of raising rates to cool what it calls an “overheating” economy.
Poilievre declined to be interviewed for this story. The party contest will end with a vote in September, and the next federal election is due in 2025.
Among Conservative voters, 56.5% say they prefer Poilievre compared to 14% for centrist Jean Charest, his closest rival, according to an Ekos Research poll this month.
TRUMP POPULISTS
The attacks come at an awkward moment for the bank, and both Macklem and Senior Deputy Governor Carolyn Rogers (NYSE:ROG) have made rare concessions this month, saying high prices may be undermining public trust in the institution. Bank of Canada’s main mandate is to control inflation.
Frank Graves, president of pollster Ekos Research, said Poilievre “is nurturing exactly the same forces that (former U.S. President Donald) Trump nurtured.” Graves calls this voter pool “ordered populists” and says they share the same values on both sides of the border, including a “deep institutional mistrust.”
In February, when protesters railed against vaccine mandates and COVID-19 restrictions, paralyzing Ottawa for three weeks, Poilievre served them coffee and echoed their rage in parliament.
Similar to U.S. Senator Rand Paul’s past push to audit the Federal Reserve Board, Poilievre wants the Bank of Canada bond-buying program to be audited.
Derek Holt, head of capital markets economics at Scotiabank, said he viewed Poilievre’s attacks “as political rhetoric with low probability of policy changes.”
Politicians have taken aim at the Bank of Canada in the past, once in the late 1950s and early 60s, which ended with the bank’s policy-setting independence being enshrined in law, and again in the 1990s by former Liberal Jean Chretien.
Trudeau is defending the bank.
“Canada has one of the most respected central banks in the world, and it is so because of its independence from political actors and political interference,” Trudeau told Reuters in an exclusive interview this month.
Another Poilievre promise is to make Canada the “blockchain capital of the world,” saying alternative currencies like bitcoin will “let Canadians opt out of inflation.”
“That’s total nonsense,” Dodge said. “There is a global economic system … and you can’t sort of stand totally aside from that system.”
