Surprise Bank of Canada chief stands ready to nurture economy

Thu May 2, 2013 7:07pm EDT
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By Louise Egan and Randall Palmer

OTTAWA (Reuters) - Canada tapped an outsider on Thursday to head its central bank, bringing in the well-respected head of the Canadian export credit agency, who immediately stressed the need to nurture a choppy economic recovery.

Incoming Bank of Canada Governor Stephen Poloz, 57, worked at the central bank for 14 years earlier in his career. But he has spent the last 14 years at Export Development Canada.

Poloz takes over as central bank chief on June 3 when Mark Carney leaves, a surprise for markets, which had tipped Carney's senior deputy Tiff Macklem as the most likely choice. Carney becomes governor of the Bank of England on July 1.

In his debut with reporters, Poloz was careful not to contradict the views that Carney and the central bank expressed in their quarterly economic report last month.

"We are in a recovery that is not as vigorous as would normally be expected and ... I think it will be necessary to nourish it, I don't know for how long," Poloz said in an introductory news briefing in Ottawa.

Canada's economy recovered well from the 2008-09 recession thanks to aggressive government spending, tax cuts and record-low interest rates. But growth stalled last year, with the economy recording its slowest two quarters of growth since the crisis.

The Bank of Canada has kept its key rate on hold at what it describes as a stimulative 1 percent since 2010. But it has signaled for the past year that the next move will be a rate hike, not a cut.

Poloz said exports now needed to fuel the Canadian economy, and he believed this was already starting to happen. Canada unexpectedly recorded a trade surplus in March, the first monthly surplus after a year of deficits.   Continued...

Outgoing Bank of Canada Governor Mark Carney (R) and incoming governor Stephen Poloz walk to a news conference announcing Poloz's appointment in Ottawa May 2, 2013. REUTERS/Chris Wattie