Layton vows not to meddle in Bank of Canada rates

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NDP Leader Jack Layton is vowing not to interfere with the Bank of Canada's interest rate decisions if elected prime minister.

The New Democrat leader appeared to be stepping back Friday from comments the day before that he would like the Bank of Canada to keep interest rates low.

"We have a longstanding approach here in Canada which has the Bank of Canada handling the monetary issues, and the fiscal issues are dealt with by the government," Layton said Friday.

"There's a lot of Canadians who feel interest rates shouldn't be increased, but this is a decision for the governor of the Bank of Canada."

Layton said he expects there "an exchange of views" when the prime minister meets with Bank of Canada Governor Mark Carney.

"We would certainly maintain that tradition, but we would not have the government interfering with the monetary policy because that arms-length relationship has worked well for Canada and that's something that we believe should be maintained," Layton said.

The Conservatives and Liberals, who have unexpectedly found themselves losing ground to the NDP, pounced on the comments.

"I don't know where to begin. Look, this is one more reason why you can't trust Jack Layton on the economy. A responsible government does not tell Mark Carney and the Bank of Canada what to do. That's Economics 101," Liberal Leader Michael Ignatieff said.

Finance Minister Jim Flaherty, the Conservative candidate in Whitby-Oshawa, Ont., said interfering with interest rates would have consequences around the world.

"This is amateur hour, this is shooting from the lip, shooting from the hip, back of the envelope stuff," Flaherty said.

"People see that and they start to wonder what kind of government would this be in Canada, particularly when we have the reputation we have as being solid economic, solid fiscal managers and performers."

In an interview Thursday with Thomson Reuters, Layton was asked whether he would like the institution to hold off on raising interest rates, and replied, "Yes."

"Debt levels are already high, and higher interest rates could weigh families down further," the news agency reported the NDP leader as saying.

The comment prompted fierce reaction from the other major federal parties. Liberal candidate and former finance minister Ralph Goodale said it's crucial the government's fiscal policy — setting the country's budget and spending programs — be kept separate from monetary policy such as interest rates, which are managed independently by Bank of Canada Governor Mark Carney.

"The Bank of Canada is fiercely independent. It runs monetary policy independent of the government of Canada," Goodale said.

"That is something that any serious political leader in this country just does not do."

NDP platform scrutinized

Flaherty said there's a clear choice between an NDP-led coalition or a majority Conservative government.

"I was part of the team that cleaned up the NDP government's mess in Ontario after the Rae government from 1990 to 95. And people in this province remember what NDP government meant in our great province of Ontario. It meant high taxes, high unemployment, huge increases in the welfare rolls," he said.

Flaherty said the only way the NDP can cover their spending proposals is to raise taxes.

Goodale said Layton's platform promises and the possibility he'd interfere with interest rates would erode Canada's credibility abroad.

"When that happens, your standard of living drops, your buying power drops and Canadians are in a far more vulnerable position. For one reason, because inflation will spike in the country, and that will put everybody back into the pickle that they were in 25 years ago when interest rates were threatening the quality of life and the standard of living of every Canadian," he said.

Layton said he welcomes the scrutiny, which is why the party puts out its platform.

"We take a fiscally very prudent approach to it," he said, pointing to Manitoba's NDP government and its nine years of balanced budgets.

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