Prime Minister Stephen Harper will hold a special meeting Tuesday with Finance Minister Jim Flaherty and Bank of Canada Governor Mark Carney, underscoring the urgency for policy makers to be on the same page as they assess how to respond to the worsening global economy.
The gathering in Ottawa is expected to focus on meetings that Mr. Flaherty and Mr. Carney attended in Washington over the weekend with their counterparts from the Group of 20 nations and private-sector bankers. It comes as European policy makers are scrambling to contain a debt crisis that threatens to engulf the region's banking system, and which many analysts and Canadian officials fear could tip the global economy back into recession.
While Mr. Flaherty and Mr. Carney meet regularly, it is very unusual for the Minister and the Governor to also meet together with the Prime Minister.
The Prime Minister's Office confirmed the meeting, which will take place at 4 p.m. in Parliament's Centre Block, but declined to comment further.
Mr. Flaherty – who has promised a fall update of the government's deficit numbers but has not yet set a date – is under pressure from opposition parties to act with new stimulus measures in order to protect jobs. The minister's comments to date suggest he will wait until the government's next budget in 2012 before deciding whether the government needs to alter its plans, although he has also indicated he would do what is needed to respond to a large economic shock.
The surprise gathering comes on the heels of high-level meetings of finance ministers and central bankers in Washington over the weekend, where Mr. Carney became part of the story.
Reports of one closed-door meeting described a clash between JPMorgan Chase CEO Jamie Dimon and Mr. Carney over new banking rules requiring larger capital buffers.
Finance ministers and central bankers of the G20 are scheduled to meet again on Oct. 14 in France, followed by a G20 leaders' summit on Nov. 3.
On Monday, BMO Nesbitt Burns chief economist Sherry Cooper took a swipe at Mr. Harper's approach to the economy, arguing in a note that now is not the time to urge governments toward more austerity.
"The misplaced belief that the road to economic prosperity is paved by near-term fiscal tightening, as espoused by our own Prime Minister Stephen Harper and British Prime Minister David Cameron last week, shows we have learned nothing from Herbert Hoover's response to the Great Depression," she wrote.
"Countercyclical fiscal policy has now become unpopular and misunderstood. Yet, we are in danger of repeating the deflationary policies that caused the 1929 stock market crash and the Great Depression."
Craig Alexander, chief economist at Toronto-Dominion Bank, said the timing of the meeting suggests to him that the three men will be discussing the various risks to their economic forecasts in light of what Mr. Flaherty and Mr. Carney heard in Washington.
"It would also be natural for them to discuss how they would respond if the downside risks occur," he said.
Don Drummond – the former chief economist at TD who spent 23 years at the Finance Department – said in an interview that while meetings where the Prime Minister and the Bank of Canada Governor are both in attendance are rare, Tuesday's gathering does not necessarily suggest a deeper level of worry than a few days ago, or imminent action.
"Keep in mind we've never had an economist as Prime Minister before," Mr. Drummond said. "Previous prime ministers were probably quite content to allow the Minister of Finance to be the interface (with the Bank of Canada Governor), but this may only reflect the Prime Minister's interests in such matters as opposed to anything being `up.'"
Bill Curry