Election comment has NDP scrambling

Fri Apr 29, 2011 2:48pm EDT
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By Rod Nickel and Allan Dowd

KAMLOOPS/MONTREAL (Reuters) - New Democratic Party Leader Jack Layton, whose party has turned the Canadian election campaign on its head, scrambled on Friday to put out a brush fire about the country's central bank.

Layton said he fully respected the independence of the Bank of Canada, a day after he appeared to challenge that by telling Reuters the Canadian economy was too fragile to weather higher interest rates -- perhaps his first gaffe of the campaign.

"We have a long-standing institutional arrangement here with the Bank of Canada dealing with monetary policy at arms-length from the government. That's the way it should be," Layton told a news conference in Kamloops, British Columbia.

The Conservatives, who are leading in the polls, and the third-place Liberals pounced on Layton's comments as evidence that the New Democrats were not ready for political power.

Conservative Finance Minister Jim Flaherty called it "shooting from the lip", and the Liberals said the NDP was challenging Canada's commitment to low inflation.

Canadian politicians rarely comment on interest rates, because the central bank is supposed to be independent.

The New Democrats have been under the political microscope since they stunned observers by jumping into second place in opinion polls, well ahead of the Liberals.

If the Conservatives can't form a government, and if the NDP wins the second largest number of seats, Layton could have a chance of forming a minority government.   Continued...

<p>Conservative leader and Canada's Prime Minister Stephen Harper speaks during a campaign rally in Quebec City April 28, 2011. Canadians will head to the polls in a federal election on May 2. REUTERS/Chris Wattie</p>