OTTAWA/TORONTO (Reuters) - Extending Bank of Canada Governor Stephen Poloz’s tenure past the June expiration of his term would help underpin market confidence as the coronavirus pandemic hits the economy, a government official and market players said on Tuesday.
A new governor is slated to take the reins on June 3 when Poloz, 64, ends his seven-year tenure, but Ottawa has so far not named a successor. The recruitment process began last year and was expected to have been completed by this spring, the bank’s board said in December.
The prime minister and finance minister, who have the final say, have been busy rolling out economic aid packages amid the outbreak.
The often folksy governor has been through the wildest month of his term in the face of the coronavirus pandemic. The bank cut key interest rates three times by a total of 1.5 percentage points to 0.25% and embarked on large-scale asset purchases, or quantitative easing, for the first time.[L1N2BK0P1]
A senior government source told Reuters that he could “completely understand why ... (people) would want to see the governor stay longer during a period like this.” The official said such a move would support confidence but that he was unaware of discussions about an extension.
If Poloz stayed on about six months or “until the recovery is well under way,” it would bolster confidence, said Michael Goshko, corporate risk manager at Western Union Business Solutions.
Karl Schamotta, chief market strategist at Cambridge Global Payments, said “perception issues ... tend to dog new central bankers” and Poloz remaining on would help avert that.
A Bank of Canada spokeswoman said the process for appointing a new governor was proceeding as planned and that extending Poloz’s term “would be a decision for the government.” The finance minister’s office had no immediate comment.
In December, Poloz said he would step down when his mandate expired. Asked this month whether he would reconsider, he replied: “I have no plans to change that decision.”
Outgoing Bank of England Governor Mark Carney, who was Poloz’s predecessor, extended his tenure more than two years to March 2020 from its planned 2018 end as the UK completed its exit from the European Union.
Capital Economics senior Canada economist Stephen Brown said that while extending Poloz’s term could help, he could also remain in “some form of temporary adviser role” to the next governor.
On March 13, after a rate cut and as coronavirus cases started to balloon in Canada, Poloz, in a rare departure, lauded Deputy Governor Carolyn Wilkins in a news conference for her extensive experience during the 2008-2009 financial crisis.
Both Schamotta and Brown said Wilkins would be a good choice if Poloz does not want to remain.
“Markets have a lot of confidence in her ability to steer the Bank,” Schamotta said.
Other leading candidates include Tiff Macklem, a former senior deputy governor, and former Deputy Governor Jean Boivin, now head of BlackRock Investment Institute.
Reporting by Steve Scherer in Ottawa and Fergal Smith in Toronto; Additional reporting by David Ljunggren in Ottawa; Editing by Amran Abocar and Peter Cooney