Bay Street sorry to lose Mark Carney
Canadian business leaders reacted with cautious optimism to news Monday that the country's top central banker is stepping down for a transatlantic promotion to become governor of the Bank of England.
On Monday, news broke that Mark Carney will become England's top central banker on July 1. Although the timing of the announcement came like a bolt from the blue to some, the move had in fact been rumoured for several months — though Carney himself denied the talk as recently as August.
A cross-section of Bay Street economists and financiers polled Monday said the move was a good one for all sides.
"They need somebody strong to take over and I think he's an excellent choice," said John Stephenson, portfolio manager and vice-president at First Asset Management. "It's sort of a natural evolution."
Carney is widely credited with helping the Canadian economy stickhandle its way out of the danger that most industrial economies faced during the financial crisis that began in 2008.
"He's been a steady hand on the wheel in navigating the economy through the crisis," said Ian Nakamoto, research director at MacDougall, MacDougall & MacTier in Toronto.
While Canadian policymakers fret about growing debt loads, especially with regards to mortgages, there's a broad consensus that Canada's low-rate environment and modest economic growth will see the country better off than most of its peers for the next little while.
The same certainly can't be said of Carney's next destination, England. The British economy has slid back into recession for the last two quarters, a situation that's especially problematic considering biting austerity cuts aimed at slaying the country's deficit are coming into effect.
"He's definitely going to a more challenging role," Stephenson said. "He's jumping in at a really weak time."
His proponents say Carney's the ideal man for the job. After starting in the private sector at Goldman Sachs, Carney did a stint working in the finance department before making the leap to the Bank of Canada. So he's well versed in all the levers that affect the economy.
"For an outsider, he is exceptionally well-placed to take over at the Bank of England," an RBC Dominion Securities' London-based research team said in a note.
"He's been a superstar for some time," Stephenson said. "His star has been rising, so the next step is for him to take on a more influential country, and England is that." As economist Patricia Croft quipped, "We're a G8 country, but we're No. 8."
As Carney's star has risen, so, too, has Canada's reputation and influence in the rest of the world.
"He raised the profile of Canada's financial system, so it's sort of a prestigious loss," Nakamoto said. "He'd never say it but he's left a very good mark for Canada on the world stage," he said.
"I can see why he chose to go," Nakamoto said.
Carney becomes the first person not born in England to head up the Bank of England in its 318-year history.
"He's the rock star of monetary policy, and he's Canadian, so I'm very sad to see him go," Croft said.