Bank of Canada Deputy Governor Tiff Macklem appears at a Commons finance committee on Parliament Hill in Ottawa on Tuesday, April 23, 2013. THE CANADIAN PRESS/Sean Kilpatrick

Morneau names Tiff Macklem new Bank of Canada governor

The central bank has slashed its target overnight interest rate to 0.25 per cent

Tiff Macklem, a former second-in-command at the Bank of Canada, is returning to the central bank to take over the top job at a moment that he says cries out for bold, unprecedented responses to the economic crisis fuelled by COVID-19.

And he suggested that once the current crisis passes, a key focus for the bank will be how climate change will shape the economy, productivity, spending, and ultimately prices.

But seated alongside the man he will replace, Stephen Poloz, and Finance Minister Bill Morneau, Macklem said there is a “need to try and overwhelm the crisis” to stabilize the economy and “restore confidence.”

So far, the central bank has slashed its target overnight interest rate to 0.25 per cent and started an unprecedented bond-purchasing program to fund federal fiscal stimulus that stands at over $146 billion.

All of that would qualify as “bold, unconventional policy responses” that embrace the idea that “you’ve got to think beyond the normal responses,” said Macklem, now the dean of the business school at the University of Toronto.

He cautioned against negative interest rates, calling them too disruptive for an already disrupted financial system, adding he was comfortable with 0.25 per cent being as low as the bank would go.

“It’s really critical that credit keep flowing, that (businesses) can borrow money to get them through this and a critical function of the Bank of Canada is to provide the liquidity to keep the financial system functioning,” Macklem said.

“As the restrictions are lifted, the economy will start to bounce back, it’s not going to be a snap back to normal. It’s going to be a phased approach, where this virus is going to be out there for some time and the Bank of Canada will play its role.”

The bank controls the country’s money supply, trying to support economic growth and stability while keeping inflation on target. As well, the governor’s statements about the economy and the financial system set trends and move markets — all roles Macklem knows well.

Macklem was the No. 2 at the Bank of Canada just over a decade ago as Canada emerged from the global financial crisis, and played a senior role within the central bank during the crisis itself. Claire Kennedy, who chaired the bank’s recruitment committee that recommended Macklem, said in a statement that background was part of the reason Macklem was tapped for the job.

Finance Minister Bill Morneau said what the bank and government were looking for was “someone with the deep expertise and understanding not only of the Canadian economy, but the global economy and the current challenge.”

Macklem has taken an interest in recent years in the role of artificial intelligence in the economy, as well as climate change. Last year, he led a government-struck panel that recommended the creation of tax credits to encourage Canadians to put their retirement savings into climate-conscious investments.

“Climate change is a major force that’s going to be impacting the economy, like globalization, like technological change,” Macklem said Friday.

“We will be looking at climate change along with a host of other major economic forces acting on the economy to the extent that they affect inflation.”

By naming Macklem as the bank’s 10th governor, the government highlighted the need for ”institutional stability” at the Bank of Canada, wrote CIBC chief economist Avery Shenfeld, and he is unlikely to represent a major change at the central bank.

Born in Montreal, Macklem was considered a top candidate to become governor in 2013, but was passed over when Poloz was appointed. Similarly, Carolyn Wilkins, the bank’s current No. 2, was considered high on the list of successors when Poloz steps down from the job on June 2.

Poloz called leaving the his dream job as governor “bittersweet.”

“Every governor understands that you are a steward,” he said, “and handing over the reins to someone as capable as Tiff Macklem means the bank and its role in supporting Canadians is in solid hands.”

Jordan Press, The Canadian Press

Like us on Facebook and follow us on Twitter.

Banking

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Strong thunderstorms expected for Shuswap, Okanagan this weekend

Environment Canada has issued a special weather statement with storms expected late Saturday

Vernon council supports $90M rec centre

Referendum required if recreation partners in District of Coldstream and RDNO back it too

WATCH: $2,600 buzz cut for Vernon man

Richard Rolke raises nearly $3K for CMHA’s crisis line with fund ‘razor’

‘We are not seeking a handout,’ Enderby drive-in owner says

Touched by fundraising efforts, Starlight says show support by coming to the movies instead

$113K boost for North Okanagan charities on COVID-19 frontline

Partnership between United Way and Community Foundation supports organizations from Vernon to Revelstoke

Feds looking at ways to reunite families amid COVID-19 border restrictions with U.S.

Some families with members of dual-citizenship have become separated due to the pandemic

VIDEO: Humpback whales put on quite a show

The ‘playful’ pod lingered by a Campbell River tour operator’s boat for quite some time

B.C. woman launches First Nations search, rescue and patrol program

Linda Peters envisions trained searchers ready to go at moment’s notice in each B.C. First Nation

Large cruise ships barred from Canadian waters until end of October: Garneau

Last year 140 cruise ships brought more than two million visitors to Canadian ports

Flood watch for Salmon River upgraded as high temperatures, rain forecast

Shuswap Emergency Program warns residents to prepare now for possible extreme flooding

Man who bound, murdered Vancouver Island teen still a risk to public: parole board

Kimberly Proctor’s killer is still ‘mismanaging emotions,’ has had ‘temper tantrums’

RCMP request public’s help in locating missing Salmon Arm man

Ken Derkach is a familiar face to many, one of the city’s residents who is without a home

Booze on Kelowna beaches? Mayor says ‘not at the moment’

Mayor Colin Basran says alcohol in public spaces is not on council’s radar right now — but that could change

Getting hitched at historic B.C. gold rush town still on table during COVID-19 pandemic

Micro-weddings, online visits, offered at Barkerville Historic Town and Park

Most Read