Stephen Poloz to step down as Bank of Canada governor at end of term

The Bank of Canada says Stephen Poloz won't seek a second term as governor when his seven years in the job expire next year.

Before becoming head of Canada's central bank in 2013, Poloz was chief executive of Export Development Canada.

Poloz, the bank's ninth governor, replaced Mark Carney, who left the Bank of Canada to become governor of the Bank of England. 

Sherry Cooper, chief economist at Dominion Lending Centres, said Poloz had big shoes to fill and has done well.

"I think he has done a great job," Cooper said. "If you just look at the Canadian economy, it's been remarkably stable."

Poloz's term expires on June 2.

"The role of governor of the Bank of Canada has been my dream job," Poloz, 64, said in a written statement about his decision. "I will leave it next June with gratitude and great pride."

The board of directors of the central bank says it has begun a search process to select his replacement.

The statement also notes that during Poloz's time as governor, the bank has "created the conditions for steady economic growth, low unemployment and inflation close to target through very challenging times."

Who will fill his shoes?

The board of directors of the central bank said it has begun a search for his replacement.

The Bank of Canada expects to complete the recruitment process by the spring of next year and, subject to approval by the federal finance minister and cabinet, have Poloz's replacement in place for June 3, 2020.

Carolyn Wilkins, the senior deputy governor, is most often mentioned as a possible successor to Poloz, who has been strongly supportive of his second-in-command at the bank.

Wilkins has often taken the lead in answering questions regarding the central bank's monetary policy report, and the senior deputy governor sometimes makes the opening statement.

However, being senior deputy governor is no guarantee of the top job. Tiff Macklem, the senior deputy governor under Carney, was passed over in favour of Poloz.

Other possible successors include Jean Boivin, global head of research for the BlackRock Investment Institute and a former deputy governor of the Bank of Canada, and Paul Rochon, the deputy minister at the Finance Department.

Cooper pointed to Evan Siddall, the chief executive at Canada Mortgage and Housing Corp., as another possible replacement, but added that Wilkins is the most likely candidate.

"I think they'd like to have a woman for the first time as the governor of the Bank of Canada," she said.

Poloz surprised financial markets when he cut the bank's key interest rate in January 2015 by a quarter of a percentage point to 0.75 per cent in response to a sharp drop in oil prices.

The governor was criticized by some for not signalling to investors the possibility of a rate cut, but he defended the decision by saying that statements that explicitly guide market expectations are best reserved for extraordinary times.

The interest rate cut proved to be prescient as the drop in oil prices took a bite out the economy that year, and Poloz moved to cut the bank's key rate again in July 2015.

In an effort to improve communications, the Bank of Canada began last year having a member of its governing council give a public speech a day or so after interest rate announcements that do not also come with an accompanying monetary policy report.

The search for a new Bank of Canada governor comes at an interesting time for the central bank.

The bank kept its key interest rate on hold at 1.75 per cent when it made its rate announcement earlier this week, but many economists have suggested it may look to cut its key interest rate early next year.

The Bank of Canada has kept its overnight rate target on hold for more than a year due to what it has said has been the resilience in the Canadian economy.

In doing so, the central bank has stood out from many of its international peers that have moved to loosen monetary policy and cut interest rates in response to worries about a weakening global economy.