This just in: the leader of the NDP isn't a big fan of high interest rates.
In a remarkably gaffe-free NDP campaign, Jack Layton's affirmative response to a question on whether the Bank of Canada should hold off on raising interest rates was met with a gasp as quick as it was feigned.
Goodness! The Bank of Canada's independence could be compromised if Mr. Layton were to ever become prime minister and utter a similar opinion. Oh, unless he said something along the lines that Canada's prosperity is derived from sound fiscal and monetary policy -- that opinion on the bank's decisions would be just fine.
At a guess, markets and governor Mark Carney would have more to fret over in such an eventuality than such a patently milquetoast statement. In any case, Mr. Layton issued a follow-up statement the next day that clarified his support for the traditional arms-length relationship between the Bank and the government of the day.
For the record, one must wonder where the concern and outrage was on April 1 when Mr. Layton said of the Bank of Canada, "I don't think they are concerned enough about how high the dollar is going." Of course back then, the NDP was languishing in the mid-teens, and Mr. Layton wasn't measuring the drapes in Stornoway and contemplating a possible move across Rockcliffe to Sussex Drive.
Mr. Layton, welcome to your first lesson in the discipline of power.
A quicksilver tongue can now get you into trouble, quickly. And common-sense thoughts can violate protocol. (Here's some free advice: It's OK to fire the Bank of Canada governor at the end of their term, so long as you never explain why you're doing so, and say thank you.)
It should go without saying that Mr. Layton's blunder is Mr. Layton's fault. He needn't be surprised by the faux outrage in the financial community, nor should he be so naive as to give the Conservatives an opening to attack him as an economic Vandal willing to rip the lid off of inflation in order to score some populist points.
And there is the small matter that he is simply wrong. Interest rates are near historic lows -- and debt loads are so high in part because low rates have made borrowing so affordable. Mr. Layton's now-withdrawn critique is nonsensical and economically ignorant.
Yet, there is a broader principle here; Mr. Layton should have the right to be nonsensical and to spout economically ignorant tripe.
What, precisely, is the problem with party leaders expressing their opinion on the proper direction of monetary policy in an election campaign? Certainly, they are free to do so on fiscal policy -- indeed, we demand that we do so, to an excruciatingly unrealistic degree.
Interest rates have a towering impact on Canadians' economic lives, from the affordability of a mortgage to the ability to nurture a business. That makes it more important, not less, for monetary policy to be part of the democratic discussion.
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