NDP says not meddling with monetary policy

Fri Apr 29, 2011 2:00pm EDT
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KAMLOOPS, British Columbia (Reuters) - The New Democratic Party said on Friday that leader Jack Layton was expressing a personal opinion on central bank interest rates, not seeking intervention in monetary policy, in comments to Reuters on Thursday.

With polls showing an unprecedented surge in NDP support ahead of the May 2 election, Layton was asked in an interview if he would like to see the Bank of Canada hold off on interest rate hikes.

"Yes," he answered, saying he was worried about the effect of higher interest rates on job creation and personal indebtedness.

"That's not a call for interference. That's an opinion," a senior NDP official, who asked not to be named, told Reuters on Friday.

The initial comment sparked a flurry of criticism and outrage from political opponents who accused the left-leaning leader of wanting to meddle in the affairs of the central bank, which is an independent institution.

"This is amateur hour, this is shooting from the lip, shooting from the hip, back-of-the-envelope stuff," said Conservative Finance Minister Jim Flaherty. "It has consequences around the world. People see that and they start to wonder, what kind of government would this be in Canada?"

Layton had waded into a territory where politicians rarely venture. The unspoken rule in Canada is for the prime minister, finance minister and other members of cabinet to refrain from even expressing an opinion on interest rates.

Layton has been thrust into the spotlight in the final days of the Canadian election campaign, with polls showing the NDP closing in on the incumbent Conservatives. The party could at least form the official opposition in Ottawa for the first time in its history.

The Bank of Canada has kept its key interest rate on hold at 1 percent since last September. Most market players surveyed by Reuters expect the bank to raise rates in July.

(Reporting by Rod Nickel; Writing by Louise Egan; editing by Peter Galloway)

<p>Canada's NDP leader Jack Layton answers reporters' questions after a campaign rally in Winnipeg, Manitoba April 27, 2011. REUTERS/Fred Greenslade</p>