The Bank of Canada today cut its benchmark interest rate today to nearly record lows, now just 0.5%. In the face of an oil shock and other weakness, monetary policy is expected to do the heavy lifting of beating an economic funk. Today’s move reflects a poverty of economic policy from the ruling Conservatives and much of the political class.
Harper has been adamant that Canada’s downturn—now very likely a recession, about which his own Finance Minister remains in denial—is the result of global forces. There’s nothing that can be done to counteract a host of external problems but to button down. The best a government can hope for is to maintain a fabled fiscal discipline.
However, there’s a disjoint between saying that policy couldn’t have been used to avert downturns like this one and screaming bloody murder anytime someone raises the prospect of even mildly activist, redistributive, old-school social democratic economic policy. If current policy is that ineffective, then perhaps it’s high time to try something else? “There’s nothing we could have done” is just a fatalistic cover for political choices.