Bank of Canada’s willingness to speak up will offend some, but it’s time to open policy debates
Article content continued
Those people will be doubly displeased by Macklem’s assertion during the question-and-answer period that “we are going to need to accelerate our efforts” on dealing with climate change, a fact-based statement that nonetheless will be construed by some as political.
However, it’s 2020 and central bankers are learning how to live with the fame that was thrust upon them during the financial crisis, when they arrested the Great Recession with relatively little help from elected officials.
There have been missteps, to be sure. Carney, who also served as head of the Bank of England, and Raghuram Rajan, the former Reserve Bank of India governor, often strayed too far from monetary policy in their public remarks, making themselves partisan targets. Rajan, while celebrated in the Indian press, was effectively run out of his home country by the ruling political party. Carney allowed himself to become a lightning rod in the Brexit debate.
Yet central bankers would be doing the public a disservice if they retreated entirely, because voters would lose access to an important perspective. Macklem appears willing to speak frankly on important economic issues, while steering clear of offering prescriptive advice on what legislators should do about them. “Striving for equality of opportunity is simply the right thing to do,” he said in his speech to the Chamber of Commerce.
Striving for equality of opportunity is simply the right thing to do
Tiff Macklem
Such an approach will invite slings and arrows.
You could argue that it’s a bit rich for a central bank to express concern about economic disparity, since monetary policy over the past decade probably made things worse. The most obvious beneficiaries of quantitative easing (QE), the policy of creating billions of dollars to buy bonds, have been equity investors, an already wealthy minority. Macklem acknowledged that possibility in his speech, while pointing out there is also research that suggests the opposite.
