Macklem of the BoC: first lessons to be learned from managing the economic impact of the pandemic


OTTAWA – Whenever Tiff Macklem needs a break, he hops on the stationary bike he bought during the pandemic and does a heavy workout to clear his mind.

The bicycle helped the Governor of the Bank of Canada through this crisis, a crisis where he could be forgiven for feeling like he was riding precariously on a dime.

Speaking to The Canadian Press this week, Macklem briefly touched on his first year as head of the central bank and some early lessons from the pandemic.

A year ago, Macklem took over from Stephen Poloz as governor as the country emerges from the first wave of COVID-19 and public health experts warn of more, potentially worse, waves to come .

As Macklem noted, at the time there were more than two million unemployed Canadians, inflation was well outside the comfort zone of the bank, and although vaccines were in development, no one knew when they would be available or how effective they would be.

The federal government was spending billions of dollars in unprecedented spending to help hard-hit workers and businesses, while the central bank lowered its key rate to near zero to stimulate spending and bought bonds to keep markets functioning. and further stimulate in the economy.

The Bank of Canada kept its key rate at 0.25% this week, saying it still does not see the economy ready for a rate hike until the second half of next year. However, it slowed down the pace of its bond purchases further, citing improving economic conditions and prospects.

Macklem said the actions, including his comments last July that rates would stay low until the crisis was fully in the rearview mirror, were a result of lessons learned from the global financial crisis, which Macklem saw from first hand when he was second. Commander at the Bank of Canada.

“When you are hit by a real crisis, you have to try to overcome it. You need an overwhelming response, you need to go beyond normal responses,” he said.

Help from the bank and governments has been essential in helping workers and businesses become smarter and the economy more resilient to subsequent waves of COVID-19, Macklem said.

Of course, Macklem has had to pedal alone on a tandem bike since Carolyn Wilkins stepped down as senior vice governor in December. His replacement, Carolyn Rogers, will not join the central bank as Macklem’s No.2 until December 15.

The other lesson learned from the pandemic is the need for every part of the system – governments, the central bank and even frontline health workers – to play their part in managing the crisis, he said. .

“You can’t have a healthy economy without healthy people. It starts there,” Macklem said.

“We each have our roles, we each have our training, we need to do what we need to do within our responsibilities, but we also need to come together and work effectively on behalf of Canadians. “

Keeping in touch with the concerns of the average Canadian isn’t easy at the best of times for someone in Macklem’s position, but he said the move to virtual meetings has made it easier to reach people in different areas. parts of the country.

In some ways, it’s a bit like how he described his life as dean of the University of Toronto‘s Rotman School of Management just before returning to banking last year. He could move around a building teeming with students overflowing with questions and ideas.

It was an experience that broadened, Macklem said, and where he saw impacts over a short period of time, with students graduating after a few years. Policy making, he said, is a bit more abstract and without the personal connection it had to university.

“I can’t wait to get back to more experiences in person,” Macklem said, “but I think there are some lasting lessons we can learn from this and how you can get involved in a great country and do a better job of engaging with the full diversity of Canadians.

This report by The Canadian Press was first published on July 17, 2021.

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