Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Tiff Macklem, Governor of the Bank of Canada, is photographed during a video conference on June 16 2020.

Fred Lum/The Globe and Mail

It didn’t take long in Tiff Macklem’s first public appearance as Governor of the Bank of Canada to give us a small window into the character of the central bank’s new leader. Seven seconds, to be exact.

Early in Mr. Macklem’s video-conference testimony Tuesday to the House of Commons standing committee on finance, Conservative finance critic Pierre Poilievre pressed the new governor on whether he could estimate how many Canadians would be forced into insolvency if the bank were to raise interest rates. (Notwithstanding that the central bank only recently slashed its key interest rate to a record low.)

The Governor took a long, slow burn, before finally expressing his impatience with the line of questioning.

Story continues below advertisement

“You know, these questions are extremely hypothetical. We have no intention of raising interest rates,” he said.

It wasn’t quite on the scale of Prime Minister Justin Trudeau’s epic 21-second break after a question about U.S. President Donald Trump’s support of the use of the military against protesters. Still, Mr. Macklem’s pause, followed by his admonishment, sent a message that this governor isn’t easily intimidated or pushed around. Mr. Macklem may have been smiling, but he clearly has fight in him.

He’s going to need it. He has inherited a Bank of Canada that has embarked into unexplored waters with its deep rate cuts and aggressive financial-market actions in response to the COVID-19 crisis, and he will face serious questions with every move it makes – and doesn’t make – from here on out. Starting pretty much immediately.

The biggest questions surround the central bank’s balance sheet. Sometime this week, it crept above the $500-billion mark. That is a more than fourfold increase from three months ago, before the bank flooded a sputtering financial system with liquidity to keep desperately needed credit flowing. Mr. Macklem emphasized in his committee testimony that he is preparing to shift the bank’s policy focus away from stabilizing the markets and toward stimulating the economy. He gave every reason to think that he’ll rely on an even bigger balance sheet to do it.

Mr. Macklem said that the bank remains concerned about the risk of deflation. With its key interest rate already at a measly 0.25 per cent, “there’s only so much monetary stimulus space available” to lean against that risk. The implication is that any additional stimulus would have to come via the balance sheet. It was a door that the Bank of Canada had already opened in Stephen Poloz’s final weeks, but Mr. Macklem kicked it a bit wider.

The most likely scenario is that the bank will redesign its program of large-scale asset purchases - chiefly, billions in government bonds - away from its current purpose of lubricating the financial markets, and toward pushing long-term market interest rates lower. Central bankers refer to this as “yield curve control,” and it’s something that many market participants have been anticipating ever since the bank leapt to the bond market’s defence in early April.

A key question is whether such a strategy would entail an increase in the size of the bank’s bond-purchase programs – and, thus, an even bigger expansion of the balance sheet – or merely a redirection of the current purchases.

Story continues below advertisement

Regardless, the balance sheet continues to grow. Every week, the Bank of Canada is committed to purchasing at least $5-billion of federal government bonds on the open market. It is also buying billions in provincial bonds along with federal and provincial treasury bills. It is, in effect (if not expressly in intent), indirectly helping bankroll governments through the crisis.

Which leads to another priority that Mr. Macklem signalled in his finance committee appearance: defending the Bank of Canada’s political independence.

“As Governor, I will protect the bank’s ability to act independently, consistent with our mandate, because that independence is critical to the confidence that Canadians place in us, the credibility of our inflation target, and our capacity to achieve it,” he said in his opening statement to the committee.

In normal times, that’s not the kind of thing a Bank of Canada governor has to state; it’s pretty much a given in this country. Bur as long as the central bank is in the business of buying government debt, the question of whether the bank has crossed a line and compromised its independence is one that Mr. Macklem will have to confront.

It’s just one of many things that Mr. Macklem will have to face head-on in his first several months on the job. His communications work is about to ramp up fast: a speech and news conference next Monday, then the quarterly Monetary Policy Report in mid-July, the most anticipated document from the central bank in years. He’s shown early that he doesn’t lack confidence, but the task ahead is huge, and there’s little time to ease into it.

We’ll get to know Tiff Macklem a lot better in the coming weeks.

Story continues below advertisement

Know what is happening in the halls of power with the day’s top political headlines and commentary as selected by Globe editors (subscribers only). Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies