In the past, the operation of the Bank of Canada has been only been of interest to policy wonks.
Now almost everyone has an opinion according to recent poll by the Angus Reid Institute. Only 13 per cent of those polled did not respond when asked whether they trust the Bank of Canada.
On average, less than one-half (41%) said they do not trust the Bank of Canada. But more than one-half of Conservative voters (59%) say they do not trust the bank. For voters of the People’s Party of Canada, almost nine out of ten (86%) say they do not trust the bank.
Populist Conservative and PPC voters have, no doubt, been influenced by politicians who would like to see the Bank of Canada politicized. It’s a spill over effect from U.S. politics where right-wingers have politicized the Supreme Court.
Despite offering an opinion, I suspect that most Canadians know little about the role of the Bank of Canada. I had to look it up. Their website says, in part:
The Bank of Canada’s areas of responsibility are: Monetary policy, Financial system, Currency, Funds management, and Retail payments supervision.
This doesn’t seem like particularly exciting stuff to me but there’s a growing perception that the Bank of Canada is an arm of the federal government. However, the BoC is an independent Crown corporation that is strictly independent of the politics.
Perhaps the populist voters of the Conservative and PPC parties confuse the BoC with the role of banks under the Emergencies Act. That act directed banks and other financial institutions to stop doing business with people associated with the anti-vaccine mandate convoy in the nation’s capital, with the intention of drying up the well-funded occupation.
Or maybe Canadians think, as armchair quarterbacks, that they could have done a better job than the experts on the board of the BoC.
I doubt it.
We live in times of great uncertainty and two years ago, no one could have predicted the way things have unfolded.
Back then, everyone agreed that the only way to halt the pandemic was to have people stay at home. And if they couldn’t work, give them money in order to make ends meet.
Canadians saved money during the pandemic and now they want to spend it. Demand for goods and services is high and supply is low.
What happens next is anyone’s guess. Economists are now predicting a recession but they have been wrong before.
“Why did economists fail to see inflation coming?” wonders business reporter Ian McGugan. “Why did central banks stumble in the battle to control rising prices? It’s easy to blame the problem on politics, on complacency or on the specific issues around the pandemic, but what seems to fit the facts best is a simpler explanation. There is just a lot we don’t understand about inflation (Globe and Mail June 25, 2020).”
What happens next is anyone’s guess. We live in unprecedented times and anyone who suggests that the BoC could have done better job has the benefit of hindsight.