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Tiff Macklem, Governor of the Bank of Canada, holds a press conference at the Bank of Canada in Ottawa on Jan. 25, after releasing a summary of deliberations by its governing council regarding its policy decision to raise its key interest rate target in January.Sean Kilpatrick/The Canadian Press

A Senate committee is calling for greater parliamentary oversight of the Bank of Canada as well as increased transparency, wading into a debate around central bank independence at a moment of heightened political interest in monetary policy.

The Senate committee on banking, commerce and the economy published a report on Wednesday looking at the causes of high inflation and the state of the economy. The report did not make any formal recommendations, but it did suggest that parliamentarians should spend more time looking at monetary policy issues.

“What is evident is the need for enhanced Parliamentary oversight over the deployment of fiscal and monetary tools, particularly in times of crisis and uncertainty,” the report said.

“The Bank of Canada should be more transparent and periodically make public its assessment of the effect of its interventions on inflation and on the evolution of key economic indicators,” it added.

The independence of the central bank from political interference is a long-standing pillar of Canada’s economic and financial system. But the run-up in inflation over the past two years – followed by the Bank of Canada’s aggressive campaign to raise interest rates – has pulled monetary policy to the centre of political debate.

Opposition politicians from both the Conservative Party and the NDP have been critical of the Bank of Canada’s handling of monetary policy over the past two years. Conservative Party Leader Pierre Poilievre made firing Bank of Canada Governor Tiff Macklem a major plank of his leadership campaign, and former Conservative leader Andrew Scheer introduced a private member’s bill calling on the Auditor-General to audit the Bank of Canada’s finances.

James Hymas: In this politicized climate, the Bank of Canada needs to be a lot better at communicating

Pamela Wallin, who chairs the Senate committee, said it is not recommending more political control over monetary policy decision-making. But she would like to see Mr. Macklem and his colleagues spend more time explaining monetary policy to parliamentarians, and also the relationship between the Bank of Canada and the Department of Finance.

“The Governor is good about coming to our committee when there’s the monetary policy report. But ... come and talk to us a little bit more about what goes into your thought process here, what did you consider?” Ms. Wallin said in an interview.

“We’ve got other committees for whom testimony would be relevant, under certain circumstances. … So I think we just wanted to give that general sense that, you know, it’s not just coming to the banking committee once a year.”

The Bank of Canada has made several changes over the past year in an attempt to increase transparency. It has begun publishing summaries of rate-decision deliberations by its governing council, and has expanded its public outreach, notably on social media. It also turned one of its four deputy governor positions into a rotating role, where deputies will serve shorter two-year terms and work only part time for the central bank.

The central bank declined to comment on the Senate committee report.

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