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January 7th, 2014

Canada’s Finance Minister Jim Flaherty is confused about monetary policy, again

In an interview this past weekend on CTV, Jim Flaherty once again provided confused answers when trying to reply to simple questions about what the future holds for interest rates.

This latest controversy comes on the heels of the Finance Minister trouble last fall, when he faced criticism in the international business press for confusing comments he made about the monetary policy known as quantitative easing.

Not only was Mr. Flaherty unclear about monetary policy, he also now seems to think that the Finance Minister plays a role in setting interest rates.

Flaherty’s inappropriate comments about Bank of Canada monetary policy is particularly surprising given how he has been happy in the past to lecture others about the role the Finance Minister has in determining interest rates!

"I don't give the banks guidance on what they should do or shouldn't do…They respond to the steps taken by the Bank of Canada as they see fit. We have a competitive banking system."

– Jim Flaherty, CBC News October 8, 2008.

Perhaps it’s time the Conservative Finance Minister takes a refresher course on monetary policy and the independence of the Bank of Canada.

Canadians deserve better.