Back in July 2020, the Governor of the Bank of Canada said this.
“If you have a mortgage, or are considering making a major purchase […]you can be confident that rates will be low for a long time.
Canadians were being told that, despite the economic uncertainty linked to the pandemic, you might go into debt in peace.
Many trusted them.
This contributed to a housing bubble and the housing crisis we are experiencing today.
And gave arguments to Justin Trudeau, who was not going to pass up an opportunity to spend, to inject unprecedented sums of money into the economy, through business aid and the CERB. These programs were certainly necessary, but their scope is questionable.
Two years later, the Bank of Canada announces a seventh increase in its key rate.
Today, Canadians are experiencing these rising rates.
This translates today into bankruptcies, second jobs, distress, citizens in debt to the core. 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 test of prudence. The US Federal Reserve also called inflation “transient”.
The Bank of Canada should still apologize for its mistakes, as the Governor of the Reserve Bank of Australia did.
It encouraged debt and an unprecedented injection of public money into the economy, and this is now turning once morest the citizens who suffer from its bad decisions.
The politician
Politically, both Jagmeet Singh and Pierre Poilievre are now openly critical of the Bank of Canada. The PQ’s PSPP also blamed her.
Some believe that it is a dangerous game for politics to interfere with central banks, which must remain independent. It’s true.
Except that the Bank of Canada is an institution that is not above all criticism. When you listen to her, she gives the impression of the banker in his ivory tower, trying, like a cold scientist, to restore inflation to 2%, without worrying regarding the effects that his horse remedy creates in life. people.
Obviously, where there is frustration available, there is politics.
It’s the Trudeau government that bears the blame today – in part 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 the appropriate measures to deal with inflation. Huge !
Canadians also strongly blame their provincial government.
Only one exception: here, in Quebec. The Legault government is the least criticized of all the provinces for its management of inflation.
Its anti-inflation shield, materialized in the last few 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 spread ourselves too thin and we don’t sufficiently target citizens deeply affected by inflation.
This government remains Teflon.
Even when things are going badly, things are going well for the Legault government.
