Stephen Poloz to Become the New Bank of Canada Chief

Stephen Poloz will become the next Central Bank of Canada head as he is all set to take over the position from Mark Carney on 3rd June. Carney will be leaving Canada for England for taking up the Governor’s position in Bank of England. The news was announced by Jim Flaherty, the Finance Minister of Canada on yesterday. Incidentally, this choice surprised many economists as they felt that Tiff Macklem, the Senior Deputy Governor will be chosen as the next Central Bank of Canada head. Poloz, currently at an age of 57, has worked as the Executive Officer of Export Development of Canada earlier. Apart from that, he has served 14 years at the Central Bank in various roles such as Head of Research Department. Incidentally, Canada is the 11th largest economy in the world and it relies on business investment and trade to grow.

The benchmark interest rate has been kept at 1% by the policy makers of the country since 2010. This is the longest pause since 1950s and the policy makers feel that over the next few years, the growth must shift from being led by exports and company spending from consumers and housing. The 2013 growth forecast of the Central Bank of Canada is currently set at 1.5%, marking the lowest for a Group of 20 member outside Europe, as far as the report published by the International Monetary Fund.

According to the Director of Fixed Income at the Macquarie Private Wealth, Jamie Price, the Canadian Government knows that the economy of the country is pretty much dependent on the whereabouts of overseas. Price added that choosing someone who has focused on overseas business for most of his career as the new Central Bank chief is therefore something that was ought to be done.

The major currency of Canada, Loonie has weakened after the announcement was made. Many economists feel that Poloz will adopt an easier monetary policy than Carney. Many think that Poloz may drop the bank’s language that interest rates may increase as well. The 2-year benchmark Government bond of Canada, on the other hand, was more or less unchanged.

After the announcement, Poloz stated that engine of growth on demand side is slowly shifting into export side of economy. He added that he will look for resumption of creation of new companies.