Stephen Poloz named new Bank of Canada governor

Stephen Poloz, president of Export Development Canada, has been named the new boss at the Bank of Canada, replacing outgoing governor Mark Carney.

Poloz, 57, was considered a contender for the role, but his appointment is a surprise to many who thought the job would go to Tiff Macklem, the bank’s senior deputy governor.

“Who said that central banking was boring?” CIBC World Markets economists Benjamin Tal and Emanuella Enenajor said following the announcement, made after markets closed on Thursday.

CIBC speculated Poloz was chosen because the government wanted someone with more experience dealing directly with the private sector. That said, the economists believe Poloz’s appointment will have little impact on monetary policy, at least in the near term.

“Best bets for now are that the Bank of Canada will be out of action until hiking rates some time in the first half of 2015. The patient has been given the right medicine thus far, so in the near term Mr. Poloz will just have to watch and make sure it keeps recovering,” CIBC said. “Down the road the challenge will be to wean Canada off the low interest rate drug slowly enough that we don't suffer withdrawal symptoms.

Poloz, who worked at the Bank of Canada in the past, will take over the governor role on June 3, replacing Carney who is leaving the post early to become governor at the Bank of England.

“It’s an honour and a privilege to be chosen as the ninth governor of the Bank of Canada,” Poloz said in a press conference Thursday afternoon, seated beside Carney and Finance Minister Jim Flaherty. The trio appeared like college buddies, joking around and congratulating one another on their answers to reporters' questions.

While Poloz offered little insight on the direction he plans to take the bank, he called the current flexible inflation target environment an “appropriate evolution that we've gone through,” starting in the mid-1980s.

The search for Carney’s replacement took five months, which some analysts saw as long, but rigorous.

Paul Ashworth, chief North America economist at Capital Economics, said there were no "obvious implications for the monetary policy outlook" given that Poloz is a long-time Ottawa policy insider.

"The Bank of Canada may have a new Governor, but he will be faced with the same problems: Persistent weak growth in Canada's closest trading partner, a downturn in Canada's housing market, still dangerously high household debt levels and uncomfortably low inflation," Ashworth said. "The Bank is still clinging to its tightening bias, but we suspect that will be dropped soon and we still think that the next move in rates is more likely to be down than up."

Minister Flaherty called the search process, "extremely thorough … as we sought the best candidates from around the world.” He also thanked Carney for his time in the role. "Mark Carney has been a visionary leader, an economic partner and a friend. Over the past few years we have faced some unprecedented economic challenges and we surmounted," Flaherty stated.

Poloz’s appointment is a surprise to many on Bay Street. A recent Reuters poll of 16 analysts unanimously named Macklem a front-runner.

“This has been an extremely thorough process as we sought the best candidates from around the world,” said Minister Flaherty. “We had some very impressive individuals come forward as candidates and I would like to take this opportunity to thank each and every one of them for their interest. I would also like to take this opportunity to thank the outgoing Governor. Mark Carney has been a visionary leader, an economic partner and a friend. Over the past few years we have faced some unprecedented economic challenges and we surmounted.”

Poloz has been president and CEO at Export Development Canada since 2011, and has worked at the Crown Corporation since 1999 in various roles including vice president and chief economist. Poloz also spent five years with Montreal-based BCA Research, and 14 years with the Bank of Canada in various capacities, including chief of research.

“Mr. Poloz has significant knowledge of financial markets and monetary policy issues and extensive management experience,” says a letter from David Laidley, head of the subcommittee that conducted the search for the new bank governor. “We are confident Mr. Poloz will make an outstanding contribution to the work of the Bank and uphold its reputation as a leading central bank.”

Poloz holds an M.A. and Ph.D. in economics from the University of Western Ontario, and an undergraduate degree in economics from Queen’s University.