Finance Minister Bill Morneau is ready to announce the next governor of the Bank of Canada, changing the leadership of the country's central bank, while navigating the uncertainty of a recession caused by a pandemic.
Several sources confirm that the announcement will be made early Friday, when Justin Trudeau's liberal government is ready to announce the successor to Stephen Poloz, whose term as governor ends in June.
News of the impending announcement was reported by Bloomberg.
Two names emerged as the most likely candidates to replace Poloz. Tiff Macklen is a former senior vice governor of the Bank of Canada and current dean of the Rotman School of Management. And Carolyn Wilkins is the bank's current senior vice governor.
Wilkins is the first woman to serve as vice governor and would be the first woman to serve as governor.
The transition comes when millions of Canadians have signed up for government aid and companies – large and small – rely on federally supported wage subsidies to survive.
In the past few months, Poloz and Morneau attended several press conferences to show a coordinated approach to monetary and fiscal policy to deal with the economic consequences of the global oil shock and the pandemic.
Morneau announced more than $ 250 billion in direct financial assistance, credit support and tax deferrals to help offset the impact of the COVID-19 pandemic.
Poloz cut interest rates to a record high of 0.25%, committed the central bank to buy billions of government bonds each week until the economy recovers, and took steps to strengthen liquidity in the banking sector.
The person who replaces Poloz will face an economy that, according to the Bank's own projections, could shrink by 30% or more in the second quarter.
The next government will have virtually no room to use interest rate cuts to help the economy. Poloz has already taken the unprecedented step – in Canada – of directly buying government bonds.
This limited flexibility is compounded by the rapid use of the federal government's fiscal firepower to put a financial floor on Canadian homes and businesses.
The parliamentary budget official says the federal deficit for the year is likely to hit $ 252 billion as a result of the COVID-19 pandemic, and could increase even more if emergency measures remain in place longer than planned.