Freeland calls Bank of Canada's interest rate decision 'welcome relief'

Federal Finance Minister Chrystia Freeland issued a rare public response to theBank of Canada's interest rate decision on Wednesday.

"The Bank of Canada's decision to maintain its overnight interest rate is welcome relief for Canadians," said Freeland in an unsolicited media statement. She also made a point of reasserting the central bank's independence.

"As finance minister, I fully respect the independence of the Bank of Canada as it delivers on its mandate to return inflation to target," she said.

Her statementfollows a week when the bank faced rare and public political pressure from three premierscalling for a halt to interest rate hikes.

B.C. PremierDavid Eby, Ontario PremierDoug Fordand Newfoundland and Labrador PremierAndrew Furey all sent letters to Bank of Canada Governor TiffMacklemclaiming rising rates are making the cost-of-living crisis worse.

WATCH | Freeland reacts to Bank of Canada decision

Bank of Canada holding interest rates 'welcomed relief,' Freeland says

12 months ago

Duration 1:13

Finance Minister Chrystia Freeland commented on news that the Bank of Canada would hold interest rates at 5 per cent. She said her priority is to ensure interest rates come down 'as soon as possible.'

At a news conference later in the day, Freeland was asked whether it was appropriate for politicians to be seen attemptingto influence the Bank of Canada's decisions.

"I'm going to speak for myself.I have a very specific job and a very specific role ... I'm the finance minister," she said. "That means it's really incumbent on me to support the independence of the Bank of Canada."

The central bank has raised the rate10 times over the past 18 months.

"Inflation has fallen from a peak of 8.1 per cent in June 2022 to 3.3 per cent in July of this year," said Freeland. "However, the elevated interest rates being used to bring down inflation are weighing heavily on Canadians."

Political pressure turns to feds

The moment the interest rate decision was announced, political pressure shifted from the Bank of Canada to the federal government.

"It's time for Justin Trudeau, whose government sets the mandate for the Bank of Canada, to clearly give the message that policies that hurt workers and hurt families are wrong," said NDP Leader Jagmeet Singh during a caucus retreat Wednesday morning in Ottawa.

CBC News followed up with the NDP to ask what Singh meant by that.

The leader's office cited aquote from former Bank of Canada governor David Dodge, who told CBCNews on Tuesday that"there's always a dialogue between the minister of finance and the governor of the bank, between public servants in(the federal Department of Finance) and staff at the bank."

Singh's office saidthe Liberals can use those discussions to request a freeze on rate increases.

Freeland didn't address Singh's comments directly when asked about them by reporters.

"I was clear in my remarks and my statement today," she responded. "Our government understands how important an independent central bank is to Canada more broadly."

Despite thislatest pause on interest rates, Singh said they'restill higher than they've been in two decades.

"Last month, our economy slowed down. And while the bankers at the Bank of Canada may think that is good news, here is what that actually means for families: fewer jobs, fewer homes they can afford, and less money to buy the things their kids need," said Singh.

WATCH | Former Bank of Canada governor reacts to decision to pause rate hikes

Bank of Canada pauses rate hikes as it faces increased political pressure

12 months ago

Duration 8:25

'The Bank is acting in their best judgement ... to fulfill the mandate that the government has given them,' former bank governor David Dodge told Power & Politics Wednesday. 'We're in a period where growth is going to be sufficiently below potential that it really is dragging down the rate of inflation.'

The topic of interest rates was notably absent from the Conservative leader's remarks on Wednesday.

Pierre Poilievre spoke in Quebec City ahead of his party's policy convention. He didn't weigh in on the rate decision at all.

When asked for comment later, Poilievre's office emailed a written statement blaming Trudeau's "out of control inflationary spending"for "unprecedented interest rate hikes."

"Despite declaring 'victory' over inflation only a few months ago," the statement said,"Trudeau's finance ministernow applauds a fiveper centinterest rate, marking an 1800 per centincrease under their watch."

Speaking in St. John's moments after the Bank of Canada's announcement, Furey defended his decision to writeto the bank's governor.

"It's my job as premier of Newfoundland and Labrador to advocate on behalf of the people of Newfoundland and Labrador," he told reporters. "So I thought it was appropriate ahead of today's announcement, whatever the governor decided,to express my view ... on where we are right now with respect to interest rates and inflation."

Critics have claimed the premiers'attempts to pressure the bankcrossed a line and jeopardizedthe bank's independence, impartialityand non-partisan nature.