OTTAWA — Canada's top central banker gave a detailed defence of the Bank of Canada's buying spree of government debt, saying it is aimed at lowering borrowing costs across the country.
The Bank of Canada has launched an unprecedented bond-buying program that effectively lowers borrowing costs for the federal government as its racks up a historic deficit.
It now holds just under one-third of federal debt, with the bank believing it can scale up those purchases before throwing a wrench into credit markets.
But the purchases have put Bank of Canada governor Tiff Macklem in a political hot seat, with Conservatives on Parliament Hill warning the central bank about appearing too cosy with the governing Liberals.
During an appearance today at the House of Commons finance committee, Macklem says the bank isn't financing the federal government, but is reducing the cost to borrow for households and businesses.
He says the central bank will stop buying government bonds once the recovery is well underway, which is likely to happen before inflation gets back to the Bank of Canada's two per cent comfort zone.