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

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

Houston physician Dr. Stefanie Steel receives her first dose of the Pfizer vaccine Jan. 19 from RN nurse manager Cindy Cockle. (Northern Health photo)
COVID-19 vaccinations get underway in Smithers

First doses are being administered to long-term care residents and priority health care staff

The COVID-19 outbreak at the two Coastal GasLink workforce lodges has officially been declared over. (Lakes District News file photo)
COVID-19 outbreak at Coastal GasLink worksites declared over

In total, 56 cases were associated with the outbreak in the Burns Lake and Nechako LHAs

Fentanyl was among the drugs seized by New Hazelton RCMP in a big bust in early January. (File photo)
New Hazelton RCMP arrest five, seize drugs and large amount of cash

Police find suspected heroin, fentanyl and crystal meth during early January drug bust

Smithers Local Health area reported 32 new cases of COVID-19 for the second week of January. (BC CDC graphic)
Weekly new cases of COVID-19 rise to 32 in Smithers LHA Jan. 10 – 16

Northern Health reports 35 new cases for 501 active, 44 hospitalized, 17 in critical care Wednesday

Brett Alexander Jones is wanted on several warrants province-wide, in connection with multiple charges. Jan. 21, 2021. Kitimat RCMP photo
Kitimat RCMP searching for man wanted on several warrants province-wide

Jones is described as a five-foot 10-inches Caucasian man, with blond hair and blue eyes.

Thursday, Jan. 28, 2021 is International Lego Day. (Jenna Hauck/ Chilliwack Progress)
Unofficial holidays: Here’s what people are celebrating for the week of Jan. 24 to 30

Lego Day, Talk Like a Grizzled Prospector Day and Puzzle Day are all coming up this week

A 75-year-old aircraft has been languishing in a parking lot on the campus of the University of the Fraser Valley, but will soon be moved to the B.C. Aviation Museum. (Paul Henderson/ Chilliwack Progress)
Vintage military aircraft moving from Chilliwack to new home at B.C. Aviation Museum

The challenging move to Vancouver Island will be documented by Discovery Channel film crews

A video posted to social media by Chilliwack resident Rob Iezzi shows a teenager getting kicked in the face after being approached by three suspects on Friday, Jan. 22, 2021. (YouTube/Rob i)
VIDEO: Security cameras capture ‘just one more assault’ near B.C. high school

Third high-school related assault captured by Chilliwack resident’s cameras since beginning of 2021

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

FILE - In this Feb. 14, 2017, file photo, Oklahoma State Rep. Justin Humphrey prepares to speak at the State Capitol in Oklahoma City. A mythical, ape-like creature that has captured the imagination of adventurers for decades has now become the target of Rep. Justin Humphrey. Humphrey, a Republican House member has introduced a bill that would create a Bigfoot hunting season, He says issuing a state hunting license and tag could help boost tourism. (Steve Gooch/The Oklahoman via AP, File)
Oklahoma lawmaker proposes ‘Bigfoot’ hunting season

A Republican House member has introduced a bill that would create a Bigfoot hunting season

Economic Development and Official Languages Minister Melanie Joly responds to a question in the House of Commons Monday November 23, 2020 in Ottawa. THE CANADIAN PRESS/Adrian Wyld
Federal minister touts need for new B.C. economic development agency

Last December’s federal economic update promised a stimulus package of about $100 billion this year

FILE - In this Nov. 20, 2017, file photo, Larry King attends the 45th International Emmy Awards at the New York Hilton, in New York. Former CNN talk show host King has been hospitalized with COVID-19 for more than a week, the news channel reported Saturday, Jan. 2, 2021. CNN reported the 87-year-old King contracted the coronavirus and was undergoing treatment at Cedars-Sinai Medical Center in Los Angeles. (Photo by Andy Kropa/Invision/AP, File)
Larry King, broadcasting giant for half-century, dies at 87

King conducted an estimated 50,000 on-air interviews

BC Coroners Service is currently investigating a death at Canoe Cove Marina and Boatyard in North Saanich. (Black Press Media File)
Drowning death in North Saanich likely B.C.’s first in for 2021

Investigation into suspected drowning Monday night continues

Kimberly Proctor, 18, was murdered in 2010. Her family has spent many of the years since pushing for a law in her honour, that they say would help to prevent similar tragedies. (Courtesy of Jo-Anne Landolt)
Proposed law honouring murdered B.C. teen at a standstill, lacks government support

Ministry of Mental Health and Addictions has concerns with involuntary detainment portion of act

Most Read