Amid growing criticism, Macklem says Bank of Canada's independence isn't under threat

As criticism piles on from politicians, pundits and interest groups, Bank of Canada governor Tiff Macklem says he's felt no threat to the institution's independence.

"I do not have any concerns about the bank's independence being under threat," Macklem said in an interview with The Canadian Press on Wednesday.

Over the last year, the central bank has been under intense scrutiny for both its policy response to the COVID-19 pandemic and the extraordinary steps it has taken this year to clamp down on decades-high inflation.

"Yes, we're getting lots of tough questions. People should be asking those tough questions. But I have felt no threat to our independence," Macklem went on to say.

Since March, the Bank of Canada has raised its key interest rate six times consecutively, embarking on one of the fastest monetary policy tightening cycles in its history.

The rate hikes have been in response to inflation reaching levels not seen in nearly four decades. Canada's annual inflation rate was 6.9 per cent in September. It has been steadily declining since reaching its highest rate this year of 8.1 per cent in June.

The ongoing rate hike cycle has sparked loud criticism from progressive voices concerned about the effect it is having on employment, as forecasters are increasingly expecting higher interest rates to trigger a recession.

In a letter addressed to Prime Minister Justin Trudeau on Oct. 21, NDP Leader Jagmeet Singh said that while he supports the central bank's independence, he warned that another rate hike will have a "serious impact on families."

When asked by reporters Tuesday about the letter, Finance Minister Chrystia Freeland acknowledged the economic pain Canadians are facing but noted that institutional stability is important during challenging economic times, with the Bank of Canada's independence playing an important role in ensuring stability.

Singh's criticism didn't stop the Bank of Canada from announcing a half-percentage point rate hike on Wednesday and signalling it wasn't done raising rates just yet.

During a news conference on Wednesday, Macklem said the Bank of Canada is facing tough decisions, and when decisions are difficult, the central bank's independence becomes more important.

He later echoed that message in his interview with The Canadian Press.

"Lots of people are giving us advice on what we should do," Macklem said.

However, there's a reason why central banks are independent institutions, he added.