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Bank of Canada deputy governor Timothy Lane delivers a keynote at the Ottawa Board of Trade in Ottawa, on Dec. 5, 2019.Justin Tang/The Canadian Press

Bank of Canada deputy governor Timothy Lane will retire in September, the central bank said Wednesday, the latest departure from the bank’s top decision-making body.

Mr. Lane is the longest-serving member of the bank’s six-member governing council, which sets interest rates and makes other monetary policy decisions. His announced departure follows that of Lawrence Schembri, the second-longest-serving deputy governor, who retired last week.

There has been considerable turnover among top policy makers over the past two years. Governor Tiff Macklem took over from Stephen Poloz in June, 2020 – a handoff that happened in the opening months of the COVID-19 pandemic. Senior deputy governor Carolyn Rogers and deputy governor Sharon Kozicki joined the governing council last year.

Only two governing council members were in their positions before the pandemic: Toni Gravelle and Paul Beaudry.

The changes are happening as the central bank ramps up its campaign to tackle the highest inflation rate in four decades. On Wednesday, Statistics Canada said the annual rate of inflation hit 7.7 per cent in May, a number last seen in 1983.

The bank’s governing council has responded in recent months with a series of interest rate hikes, pushing borrowing costs rapidly higher in the hope of cooling demand in Canada’s overheating economy and preventing high inflation from becoming entrenched.

Derek Holt, Bank of Nova Scotia’s head of capital market economics, wrote in a note to clients that Mr. Lane is respected for his depth of understanding about monetary policy, economic transitions and crises, and payments systems.

“We’ll see who is appointed going forward but at the moment the BoC’s governing council is entering fall in a weakened position, having lost two significant members,” Mr. Holt wrote, referring to Mr. Lane and Mr. Schembri.

The bank said a search for a new deputy governor will begin immediately.

Mr. Lane joined the bank in 2008 as an adviser to then-governor Mark Carney, and was appointed to the governing council the following year.

“During my time at the bank – from the global financial crisis through the pandemic and its repercussions – Canada has faced an extraordinary series of challenges, which call for clear thinking and strong leadership,” Mr. Lane said in a statement. “I’ve been proud to belong to the bank through this period and had the privilege of working with such a talented team.”

Over the course of his career, he oversaw the bank’s analysis of the Canadian economy, financial markets and international economic developments. In recent years, he led the bank’s research into payments technology, including its research into the possibility of launching a central bank-backed digital currency.

“Tim has provided superb intellectual leadership to the Bank since his arrival in 2008. The range of activities he has been involved in over that time is a testament to the breadth of Tim’s expertise and capabilities,” Mr. Macklem said in a statement.

Mr. Lane will participate in the bank’s next two rate decisions, in mid-July and early September. The bank said earlier this month that it is prepared to “act more forcefully if needed” to rein in inflation, and bank officials have said they are open to the possibility of a supersized 0.75-percentage-point hike at the July meeting. That would be the biggest rate increase since 1998.

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