Jun 23, 2022 01:12AM ET
The Bank of Canada has come under rare attack from critics after misjudging inflation and committing to rigid forecasts that prevented it from responding quickly when prices soared and the Canadian economy began to overheat.
As one of the world's leading central banks, it is now forced to play catch-up and raise interest rates more aggressively than originally expected, while Canadian household debt is reaching new highs and far exceeding that of other G7 countries.
Faced with a possible recession, the bank is facing questions from politicians, economists, and even the public about the opacity of its decision-making process and is again demanding that meeting minutes be made public, as is the practice of many of its peers.
For its part, the Bank of Canada has acknowledged mistakes and promised more transparency, including an analysis of inflation forecast errors planned for July.
Still, it faces almost daily attacks from politician Pierre Poilievre, the opposition Conservative Party's top candidate, who regularly accuses the central bank on social media of being incompetent and a puppet of the government.
He has also promised to fire Governor Tiff Macklem if elected, which would require a change in the law but still underscores the level of discontent.
The Bank of Canada, which is independent in setting policy, has not faced such political pressure since the early 1990s, when then-Liberal opposition leader Jean Chretien railed against Governor John Crow for his high-interest rate policies.
Like many other central banks, the Bank of Canada viewed inflation as "temporary" or "transitory" until the fall of 2021 and did not begin raising interest rates until March 2022, when inflation was already more than double the 2% target.