Finance Committee on Nov. 5th, 2025

[Tiff Macklem]

I'll take that.

We haven't talked a lot about monetary policy. What can we do in monetary policy? We can keep inflation low and stable. Price stability creates the conditions so that households and businesses don't need to worry about inflation. That's what we can do.

As I said, as long we're doing a good job of controlling inflation, we can provide some help to the economy to adjust to this big structural transition. Getting back to the senior deputy's “break the glass” speech, productivity is what's going to add to resilience.

[Jake Sawatzky, Liberal, New Westminster—Burnaby—Maillardville, BC]

How can we coordinate the monetary policy and the fiscal policy in a better way to ensure that?

[Tiff Macklem]

We're all working for Canadians, but we have our own mandates. We have a very clear mandate for monetary policy. It's to keep inflation close to 2%. We conduct that free of political interference. We basically look at the evidence. We make our best judgments. We take our decisions.

What you see over history is that central banks with operational independence do a much better job at delivering on that mandate. For countries where they don't have independent central banks, it ends badly. They get into inflation problems.

That's what we can do. The independence of monetary policy is a big thing. We're not elected, so it has to be a very specific delegation. We think that independence is very important. It also means that we don't tell government what to do on taxes or on fiscal policy. We stay in our lane because the independence is very important, but it only applies to our monetary policy mandate.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Sawatzky.

It's now over to Mr. Garon for two and a half minutes.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you, Madam Chair.

I have a bit of a lighter question. Since the new Prime Minister joined the former government, we've been hearing about the G7 every 10 minutes. We have to have the highest growth in the G7 and the highest investment in the G7. Mr. Champagne mentions the G7 every 10 seconds.

Canada's is a small, very open economy. Is the G7 an appropriate benchmark for measuring our productivity, investment and growth? The reason we joined the G7 in the first place was that the Americans wanted a friend in the organization; it wasn't about how big our economy was.

Is the G7 a good benchmark for a country that is in the middle of the pack among OECD countries on a number of measures?

[Tiff Macklem]

To some extent, it's true that the country we compare ourselves to most is our closest neighbour, but it's also the biggest. We often look at our performance in comparison with the Americans, even though the U.S. economy isn't the best benchmark for us, as I've said a number of times. We are more similar to the U.K., France, Italy and Germany. Other countries, Australia and Sweden, for example, have smaller economies.

I think it's important to compare ourselves to a number of countries, but we are indeed part of the G7.

[Jean-Denis Garon, Bloc, Mirabel, QC]

I have a follow-up question. I don't have much time. I am a member of the second opposition party, so I get less time than the other parties.

When we compare ourselves to G7 countries, we tend to compare ourselves to the U.S., whose debt-to-GDP ratio is very high. We compare ourselves to the U.K., which is experiencing a slowdown, and France, which can't even pass a budget. I'm exaggerating a bit, but as we know, France is having its share of problems. In addition, Japan has been experiencing low growth for quite a while.

Aside from the U.S., aren't we comparing ourselves to some of the worst performers? Isn't Germany the only one doing well?

[Tiff Macklem]

I agree that they aren't the only countries we should be looking at, but at the same time—

[The Chair, Liberal, Karina Gould]

I'm sorry, Governor. I'm going to have to interrupt you there. We're running low on time.

Just taking note, we have two left on our speakers list, and we have about eight minutes. Is it the will of the committee to give each person five minutes and go a bit over, or is it to give each four minutes and then end?

[An hon. member]

I think four is fine.

[The Chair, Liberal, Karina Gould]

Okay. Let's do that.

Mr. McLean, you have four minutes.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you.

I'll take a different approach here. Your balance sheet is still from postpandemic times. You still have about $176 billion of Government of Canada bonds on your balance sheet, but it looks like it's going up. Your balance sheet does seem like it's increasing lately.

Your losses continue on a yearly basis. You have a negative equity of about $9.9 billion now, and you've lost $9 billion on only the transactions. If you mark that to market, how much were the actual book losses that we have on the Bank of Canada balance sheet?

[Carolyn Rogers]

I don't have that number.

[Greg McLean, Conservative, Calgary Centre, AB]

At this point in time, $9.9 billion is your negative equity.

[Carolyn Rogers]

Yes.

Just to come back to other points you made, we are not in a loss position anymore. We are at positive earnings as of about a month ago, and we'll end this year in a positive position. We're starting to contribute back to that equity. I don't think it's correct to say that our balance sheet is increasing. It's still declining. We have said that we would get to a level that we would stay at, probably sometime later this year, for reserve balances. I don't know if you're looking in total at the balance sheet, or in particular at reserve balances. Either way, I don't think our balance sheet is increasing.

[Greg McLean, Conservative, Calgary Centre, AB]

I was looking at your holdings of Canadian government bonds.

[Tiff Macklem]

The big picture is that we've been shrinking our balance sheet for the last few years.

[Greg McLean, Conservative, Calgary Centre, AB]

I see that.

[Tiff Macklem]

We now have it back to about the steady state it needs to be. We are now transitioning back to our normal operating procedure.

[Greg McLean, Conservative, Calgary Centre, AB]

Will $9.9 billion be a loss that will appear on the government's Crown corporation?

[Tiff Macklem]

We ultimately consolidated with the government, as the senior deputy governor said. Our revenue now is bigger than our expenses, so we are starting to contribute to building that back up.

[Greg McLean, Conservative, Calgary Centre, AB]

Revenue bigger than expenses means that your investments are earning more interest than you're paying.

[Tiff Macklem]

Yes. We obviously have some expenses to run the Bank of Canada.

[Greg McLean, Conservative, Calgary Centre, AB]

A question some people would have is whether your debt management strategy of keeping interest rates low has an affect on your losses in that respect, and whether that weighs on your decision somewhat in addition to the other issues?

[Tiff Macklem]

We don't run monetary policy to maximize the profitability of the Bank of Canada. We run monetary policy to keep inflation close to 2%.