These are stories Report on Business is following Wednesday, April 18, 2012. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.
Markets await Carney Bank of Canada Governor Mark Carney is certain to be asked this morning about the intriguing report in the Financial Times that suggests he was asked about the possibility of jumping ship to the Bank of England.
The Bank of Canada said last night that the report was "inaccurate," but it did so in a carefully worded, one-line statement. For the record, the newspaper said only that Mr. Carney had been approached informally, not that there had been an official inquiry.
The Financial Times reported that a member of the Bank of England's court, which oversees the central bank, though doesn't set its policy, had approached Mr. Carney about possibly replacing Mervyn King in the summer of next year.
There's already a favoured internal candidate, the newspaper said, though some in the British government think a shakeup might be in order given what was deemed to be a weak response by the Bank of England to the financial crisis.
Journalists get an opportunity this morning to put the question directly to Mr. Carney at a news conference that will follow his release of the central bank's Monetary Policy Report.
The report will put flesh on the bare bones statement by the central bank yesterday, when it held its benchmark overnight rate steady at 1 per cent, but signalled that it's thinking about hiking interest rates again given an improved outlook for the economy.
Observers believe Canadians could now see mild rate hikes beginning later this year or early next, well in advance of the Federal Reserve making its first move, or the Bank of England, for that matter.
Mr. Carney is respected around the world, and is also the chief of the global Financial Stability Board. He was born and raised in Canada - in Fort Smith, NWT, and Edmonton, respectively - and studied at Harvard and Oxford. While he would be an outsider at the Bank of England, he does know London, where he worked for Goldman Sachs Group Inc. for a time, and observers note that his wife, an economist, is British.
"A BoC spokesperson said last evening that the report was 'not accurate,' which can mean many things, and the Chair of Court at the BoE, David Lees, denied having approached any candidates while stating that choosing a successor is up to the government," said Derek Holt and Dov Zigler of Scotia Capital.
"Fair enough, and the FT’s story seems to be reliant upon one member of the Court having approached Carney, which may or may not prove to be relevant by way of raising a prospective candidate’s profile in the selection process," they said in a report today.
"For now, stick with the status quo, with Carney punching above Canada’s weight in also leading the Financial Stability Board and thus playing a leading role in reshaping global financial regulation. As a contingency, note that Carney has strengthened the upper levels and rank and file at the BoC such that the central bank has enormous bench strength to steer through the remote (until proven otherwise) possibility of uncertainty at the helm."
The Bank of Canada yesterday helped reset market expectations for a rate hike, as The Globe and Mail's Jeremy Torobin writes in today's Report on Business, as it also boosted its outlook for the economy. Which is why markets will be watching so closely for what the report and Mr. Carney say today.
The Monetary Policy Report will be released at 10:30 a.m. ET, followed by Mr. Carney's appearance at 11:15 a.m.
"In recent years, the MPR has tended to simply flesh out the themes in the interest rate announcement and, thus, makes next to no market impact," said deputy chief economist Douglas Porter of BMO Nesbitt Burns.
"The details of the forecast changes will be of some interest, as will be the specifics on the output gap, but Carney’s press conference may be the real potential market mover (though the first question may be about the FT story ...), he added.
"This is his chance to further shape expectations, if the bank perceives an over-reaction in yesterday’s moves. Our assumption, though, is the bank got pretty much the reaction they expected."
The FT story was certainly making the rounds on Twitter. Nicola Duke, for example, an independent crude futures trader in London, had this to say: "Leaks re Carney for Merv's job seem like campaigning, Why would UK have a foreigner for Gov of BoE or is Goldmans only nationality you need?"
Whatever the story behind the Bank of England, here are 12 reasons why Mr. Carney should stay put:
1. He'll actually get a chance soon to play with interest rates. Given Britain's outlook and its jobless rate of 8.3 per cent, it's going to be a while before the Bank of England does anything.
2. Canada's economy is expected to outpace that of the U.K. While Mr. Carney clearly loves a challenge, at least he's got something to work with here.
3. The canal may not be the Thames, but you can skate on it.
4. I've never played cricket, but hockey is surely more exciting.
5. I've never had lunch with Laureen Harper, either, but I'd bet it's more fun than lunch with the Queen.
6. Where else can you find a currency nicknamed the loonie?
7. You just never know how things play out. What if Iceland ever actually did adopt the loonie as its currency? Mr. Carney could have a colony of his own.
8. The Canadian government does not own Royal Bank of Canada. Unlike the British government and Royal Bank of Scotland.
9. Can you "mush" dogs in Britain? I don't think you can even hunt foxes anymore.
10. Canada's banks are poised to take over the Toronto Stock Exchange. They kept the TSX out of British hands, so why not the Bank of Canada governor?
11. Entirely different terminology in Britain, and you wouldn't want to slip up. A shag carpet is not the same there.
12. One of the other officials in the running, according to the Financial Times, is Gus O'Donnell, a former permanent secretary to the Treasury, who was oft known by his initials, GOD. In Canada, Mr. Carney already holds that distinction.
- Read the FT story
- Speedy economic recovery has Carney hinting of a rate rise
- Mark Carney: A common touch, an uncommon task
Couche-Tard heads for Norway Quebec's Alimentation Couche-Tard Inc. is gaining an entrance to new European markets with a $2.8-billion (U.S.) deal for a major Norwegian company.
Couche-Tard said today it has struck a deal for Statoil Fuel & Retail ASA, which it described as the top Scandinavian convenience and fuel retailer, with more than 100 years in the region.
Not only will Couche-Tard take a leading place in Scandinavia and the Baltic region, but also in Poland.
"Moving into Scandinavia and Europe is an important step in implementing Couche-Tard’s growth strategy,” said chief executive officer Alain Bouchard.