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

Victoria’s 75,000 veggie plants ready to find a home

New gardeners line-up for Get Growing Victoria

Vancouver Island hasn’t seen a new homegrown case of COVID-19 in two weeks

Island’s low and steady transmission rate chalked up to several factors

No one injured in suspicious Victoria boat fire, say investigators

Victoria police and fire personnel called to blaze on waters near Selkirk Trestle May 22

Three people facing mischief charges after protests at Premier John Horgan’s home

Special prosecutor was appointed to avoid real or perceived undue influence

VIDEO: Saanich police tackle man who refused to move off Trans-Canada Highway

At this point, it is unclear why the man refused to move

Dump truck in Nanaimo snags power lines, snaps hydro pole, crashes

No injuries in incident Monday morning on Old Victoria Road

Ferry sailings scheduled once again at Nanaimo’s Departure Bay terminal

BC Ferries announces that resumption of service June 3 includes four daily round trips

Facing changes together: Your community, your journalists

The COVID-19 pandemic has changed the world in ways that would have… Continue reading

Island Health signs working agreement to turn former Comox hospital into a ‘dementia village’

Island Health has signed a project development agreement with Providence Living to… Continue reading

Kelowna man charged with harming a hamster

The 20-year-old Kelowna man faces several animal cruelty charges

High tech fish transport system set up to ‘whoosh’ salmon past Big Bar landslide

Fish will spend roughly 20 seconds inside the system, moving at roughly 20 metres per second

Trudeau to seek 10 days of paid sick leave for Canadian workers, says talks are ongoing

Paid sick leave is key to keeping COVID-19 spread under control, prime minister says

Snowbirds jets will not be leaving Kamloops, just yet

The Snowbirds have been in Kamloops since May 17 when a plane crashed killing Capt. Jennifer Casey

Most Read