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Macklem Leaving Sets Up Bank of Canada Insider Promotion

Canada’s central bank will probably promote from within to replace Tiff Macklem, who said yesterday he will quit as senior deputy governor seven months after being passed over for the top job, economists said.

Macklem will become dean at the University of Toronto’s Rotman School of Management for a five-year term starting July 1, the Ottawa-based central bank said. His departure creates a vacancy on the bank’s governing council, which sets monetary policy for the world’s 11th largest economy and which has kept its key policy rate at 1 percent for more than three years.

“The bank continues to have excellent people in its senior ranks, who are currently or have recently been deputy governors, who would make excellent candidates,” said Christopher Ragan, an associate economics professor at Montreal’s McGill University and a former adviser at the central bank and finance department.

The four deputies to Governor Stephen Poloz are Agathe Cote, 55; Timothy Lane, 58; John Murray, 65; and Larry Schembri, 56, who joined the rate panel in February. Jean Boivin, 41, was a central bank deputy until he took a job at the finance department last year.

Cote’s experience could win her the job and give the central bank an opportunity to promote a female candidate to a top post, said Charles St-Arnaud, Canadian economist and foreign-exchange strategist at Nomura Securities International in New York.

“Agathe Cote may have an edge,” said St-Arnaud, who has worked as an economist at both the country’s finance department and central bank. “She would bring very good knowledge of monetary policy and she would be the first woman in that post.”

No Shift

The departure probably won’t signal a shift in the central bank’s monetary policy, said Paul Ferley, assistant chief economist at Royal Bank of Canada in Toronto. The governing council works by consensus and, unlike the U.S. Federal Reserve, doesn’t publish meeting minutes or vote tallies, meaning there’s no direct evidence of Macklem’s views.

“I don’t think with his departure policy will suddenly get skewed,” Ferley said. “There are internal candidates that could very easily step into the position,” he said, declining to name any specific people.

With Macklem’s departure, the Bank of Canada loses someone with more than two decades of experience. He worked his way up in the research department through the 1990s and joined the rate-setting panel in December 2004 after a yearlong stint at the Department of Finance. He became senior deputy in July 2010, appointed to a seven-year term, after another tour at the Finance Department, this time as associate deputy minister, from 2007.

Key Role

There, Macklem had a key role at the height of the global financial crisis. He advised Prime Minister Stephen Harper at a summit of Group of 20 leaders in Toronto and on Canada’s decision to join the U.S. in offering General Motors Co. and Chrysler LLC restructuring money.

Macklem, who plays recreational ice hockey in Ottawa, also led a policy committee at the Financial Stability Board, the Basel, Switzerland-based body that’s responsible for strengthening global financial rules on behalf of the G-20.

“I will miss the Bank a great deal,” the 52-year-old Montreal native said in a statement. “Governor Poloz, my colleagues on Governing Council, and the Bank’s staff are the most dedicated and talented professionals with whom I’ve had the pleasure to work. Canada’s economy is in good hands.”

Poloz was named to lead the central bank in May after he had served as head of the government’s export financing agency. Earlier in his career he worked for 14 years at the central bank, including as head of research.

Widespread Influence

Macklem’s “influence can be seen in every aspect of our work and in central banking worldwide,” Poloz said in the statement. “I want to thank him for making the bank better, and especially for his support and mentorship during my first six months as Governor.”

The central bank’s board of outside directors will form a special committee to find a replacement, and no time frame was given in the statement for that task. The senior deputy is appointed by the directors with the approval of the federal cabinet.

Whoever wins Macklem’s job must stick to the bank’s mandate of aiming inflation at a 2 percent target, said Carl Weinberg, chief economist at High Frequency Economics in Valhalla, New York. Consumer prices advanced at 0.7 percent in October from a year earlier, and the central bank said this week the risks of it persistently missing the target appear to have increased.

“Anyone who gets the job will have to say they are worried about that” inflation trend, Weinberg said in an e-mail message.

Macklem could be a candidate for governor when Poloz’s term expires in 2020, Ragan at McGill said.

“Tiff will be an outstanding leader and dean of the Rotman School, but I’m sure the bank has not seen the end of him,” Ragan said.

To contact the reporter on this story: Greg Quinn in Ottawa at

To contact the editor responsible for this story: Chris Wellisz at

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