Newspaper article The Canadian Press

Interest-Rate Change Has Political Echoes in Election Year

Newspaper article The Canadian Press

Interest-Rate Change Has Political Echoes in Election Year

Article excerpt

Interest rate change has political fallout

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LONDON, Ont. - The non-partisan Bank of Canada has suddenly become an important player in this year's federal election.

The bank's surprise decision Wednesday to cut its trend-setting interest rate gave opposition parties fuel for their argument that Stephen Harper has mismanaged the economy and undercut the prime minister's contention that he's a steady hand on the economic tiller.

"The Bank of Canada is clearly signalling that they believe that the problems in our economy are far deeper than anything the Conservatives have been willing to admit," NDP Leader Tom Mulcair said at a news conference in Toronto.

"It's high time Stephen Harper stopped hiding, stopped hiding his finance minister, stopped playing peekaboo with the budget date and start assuming some leadership and responsibility for the economy."

Liberal Leader Justin Trudeau also said the bank's move demonstrates the Harper Conservatives are on the wrong economic track.

Wrapping up a two-day caucus retreat in London, Ont., Trudeau accused Harper of having relied on high-priced oil to produce a budget surplus and fund an expensive family tax benefits package in time for the election, scheduled for October.

But now that oil prices have plunged to less than US$50 a barrel, costing the federal treasury billions, Trudeau said Harper is making up economic policy on the fly.

Finance Minister Joe Oliver last week announced he would delay the budget until at least April, given the oil price uncertainty. That fuelled doubts about the government's ability to deliver its promised balanced budget.

However, the sudden souring of the economy is not all good news for opposition parties as they prepare for the election.

It gives them less room to make pricey promises of their own. It also raises politically delicate questions about whether they would be prepared to run a deficit to stimulate the economy, as some economists have suggested. …

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