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Conservative Leader Erin O'Toole restored Pierre Poilievre to his role as the party's finance critic.PATRICK DOYLE/The Canadian Press

When Conservative Leader Erin O’Toole dropped Pierre Poilievre as Tory finance critic in February, the move suggested an effort to pivot to the centre in advance of a federal election.

During his three years as finance critic under former leader Andrew Scheer, Mr. Poilievre had established himself as a hardline proponent of hawkish monetary and fiscal policies. Some of the views he expressed on social media were clearly outside the mainstream. He sometimes flirted with conspiracy theories about the Bank of Canada being in cahoots with Justin Trudeau’s Liberals, raising questions about the central bank’s motives.

If Mr. O’Toole hoped that removing Mr. Poilievre from the most prominent position in the Tory shadow cabinet might lead the Carleton MP to tone down his rhetoric, he was dead wrong. Mr. Poilievre continued to use his Twitter feed to trash Bank of Canada Governor Tiff Macklem, upstaging his successor as finance critic, Ed Fast. His interventions in Mr. Fast’s file reeked of grandstanding and often distorted the facts.

O’Toole announces shadow cabinet, returns Pierre Poilievre to finance critic

On Tuesday, Mr. O’Toole rewarded Mr. Poilievre’s insubordination by reinstating him as Tory finance critic. The move spoke volumes about Mr. O’Toole’s priorities as he seeks to preserve his job. The moderate Mr. O’Toole who surfaced during the federal election campaign has reverted into his pre-campaign guise, pandering to the loudest voices on the right to save his leadership.

To be clear, it is entirely fair game for opposition politicians to scrutinize the Bank of Canada’s policies, despite the central bank’s formal independence from the government of the day. But politicians should limit their interventions to determining whether specific policies fall within the bank’s mandate – which is determined by Parliament – rather than politicizing its actions.

As opposition leader in 1993, Jean Chrétien came dangerously close to undermining market confidence in the central bank’s independence by suggesting a Liberal government would direct then governor John Crow to emphasize job creation over fighting inflation. “I’m telling you he is an official of the government,” Mr. Chrétien said during that year’s election campaign, sending tremors through financial markets as investors feared a run on the Canadian dollar.

Once in power, however, Mr. Chrétien’s government largely embraced the inflation-fighting orthodoxy of the day. Though the Liberals replaced Mr. Crow as governor, then finance minister Paul Martin formalized an agreement between the bank and the government that made maintaining inflation at between 1 per cent and 3 per cent part of the bank’s core mission.

That agreement has since been renewed at five-year intervals, most recently in 2016. It is now up to Finance Minister Chrystia Freeland to decide whether to extend the agreement once again, tweak it slightly, or overhaul it altogether by expanding the bank’s mandate to include achieving full employment among the bank’s core objectives. Mr. O’Toole has called for the existing mandate to be renewed as is.

The debate over the bank’s mandate comes as the annual inflation rate – which stood at an 18-year-high of 4.4 per cent in September – is creating consternation among investors and consumers alike. At issue is whether the current spike in inflation is the result of the extraordinarily loose fiscal and monetary policies implemented since the outset of the pandemic. Critics argue those policies have pumped too much liquidity into the economy, setting off a dangerous spiral of rising prices that the central bank will eventually need to tame by raising interest rates sharply.

In a Sunday interview on CTV’s Question Period, Mr. Macklem described the recent rise in inflation above the bank’s formal target as “transitory, but not short-lived.” By that, he meant the bank considers rising prices to be the result primarily of global supply-chain bottlenecks that are temporary, but which could last longer than the bank had previously expected.

“Merriam-Webster says ‘transitory’ means ‘short-lived’,” Mr. Poilievre tweeted on Monday, before he was officially reinstated as finance critic, likening Mr. Macklem’s comments to “monetary policy by riddles.”

Central banker-speak may sometimes appear opaque to the uninitiated. But Mr. Macklem has been unambiguous about the bank’s willingness to tighten monetary policy sooner rather than later to prevent inflation expectations from becoming “unanchored” from the bank’s official 2-per-cent target. The bank took a step in that direction two weeks ago by announcing it was ending its government bond buying program, known as quantitative easing, though it said it will continue for now to purchase additional federal bonds to replace maturing debt as it comes due.

How quickly the bank reduces its overall holdings of federal bonds – which currently stand at an eye-popping $430-billion – will depend on the pace of the recovery. But it will be critical that it does so if it is to remove excess liquidity currently sloshing around in the financial system and maintain the bank’s inflation-fighting credibility.

For now, Mr. Macklem deserves the benefit of the doubt, regardless of Mr. Poilievre’s tweets.

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