Finance Minister Bill Morneau is poised to announce the next governor of the Bank of Canada, changing the leadership of the country’s central bank as it navigates the uncertainty of a pandemic-driven recession.
Multiple sources confirm the announcement will be made early Friday as Justin Trudeau’s Liberal government is ready to announce Stephen Poloz’s successor, whose term as governor ends in June.
The news of the impending announcement was first reported by Bloomberg.
Two names have emerged as the most likely candidates to replace Poloz. Tiff Macklen is a former senior deputy governor of the Bank of Canada and the current dean of the Rotman School of Management. And Carolyn Wilkins is the current senior deputy governor of the bank.
Wilkins is the first woman to serve as senior deputy governor and would be the first woman to serve as governor.
The transition comes as millions of Canadians have signed up for government aid and companies — big and small — are relying on federally-backed wage subsidies to survive.
In the past months, Poloz and Morneau have appeared at several joint news conferences to show a coordinated approach on monetary and fiscal policy to deal with the economic fallout of the pandemic and global oil shock.
Morneau has announced more than $250-billion in direct financial aid, credit support and tax deferrals to help offset the impact of the COVID-19 pandemic.
Poloz has cut interest rates to a record low of 0.25 per cent, committed the central bank to buying billions in government bonds each week until the economy is in recovery, and taken steps to strengthen liquidity in the banking sector.
The person who replaces Poloz will be facing an economy which, according to the Bank’s own projections, could shrink by 30 per cent or more in the second quarter.
The next government will have practically no room to use interest rate cuts to help the economy. Poloz has already taken the unprecedented step — in Canada — of directly buying government bonds.
That limited flexibility is compounded by the rapid use of the federal government’s fiscal firepower to put a financial floor under Canadian households and businesses.
The parliamentary budget officer says it’s likely the federal deficit for the year will hit $252 billion as a result of the COVID-19 pandemic, and could go even higher if emergency measures remain in place longer than planned.