Tiff Macklem has been named the next Bank of Canada governor as the economy grapples with the effects of the coronavirus pandemic.
Finance Minister Bill Morneau made the announcement during a news conference.
“I have the utmost confidence in Tiff Macklem’s ability to lead the Bank of Canada as its next Governor. His leadership and experience at the Bank, in the federal government, and in academia will be invaluable as he guides Canada’s monetary policy during these challenging times,” said Morneau.
Morneau also thanked outgoing Governor Stephen Poloz for his seven years at the helm, whose term ends on June 2nd.
“The past seven years have been incredibly rewarding professionally and personally, and equally challenging. I want to thank all Board members, present and past, for their support, and Minister Morneau for his leadership and friendship these past few years,” said Poloz.
“I’d like to offer Tiff my sincere best wishes for a successful term as you lead the Bank in the service of Canadians.”
Macklem is the dean of the Rotman School of Management at the University of Toronto. He was also senior deputy governor from 2010-2014 under Mark Carney and had been seen as a front runner to replace him, when Poloz was chosen instead.
A similar story played out this time around. Current deputy Carolyn Wilkins was widely seen as Poloz’s most likely successor.
Macklem says he’s looking forward to rejoining the Bank of Canada.
“A seamless transition is going to be our first priority and I’m confident that we will be able to accomplish that.”
The Bank of Canada cut its overnight interest rate 3 times since COVID-19 shut down huge chunks of the economy. Macklem says he is comfortable with current rate of 0.25 per cent is appropriate and that negative rates have disruptive effects.
“It’s hard to explain to depositors, why their deposits are shrinking in their account when they’re not taking any money out,” said Macklem.
He also says the pandemic calls for an unprecedented response, including liquidity measures to keep the economy afloat.
The Canadian Chamber of Commerce says it looks forward to working with Macklem.
“The Government of Canada’s decision puts a steady and tested hand at the tiller during an unprecedented economic storm,” it said.
“We thank Governor Poloz for a successful tenure and his service to the business community and all Canadians.”
Although Macklem’s selection came as a surprise, it’s unlikely the Bank of Canada will undergo a major change in direction.
“The focus of market participants may be in determining whether Macklem is a ‘hawk’ or a ‘dove’, but it is worth noting that the members of the Bank’s Governing Council have tended to stick to the same script over the years, with no discernible difference in the communications of individuals,” said Capital Economics, in a note.
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.