The Federal govt of Canada and the Bank of Canada are supposed to operate independently. The Minister of Finance gives the Bank of Canada its objectives or its mandate. And the Bank of Canada is supposed to carry out that mandate. The dotted line is supposed to allow the Bank of Canada Governor to exercise his/her powers without fear of political influence.
But our current Finance Minister, Mr. Flaherty, doesn’t seem to like those rules. He has repeatedly opened his mouth at inopportune times. Take last year, for example, when he publicly criticized Manulife Bank and BMO for advertising a 2.99% 5 yr fixed rate. He actually asked them to pull those ads! Not that they were the lowest 5 yr fixed rates at the time, but they were the lowest advertised rates by a major BANK. (as my regular readers know, mortgage brokers had lower rates… as they usually do). Continue reading “New threat of Rate hikes… it’s called Finance Minister Flaherty.”