Bank of Canada set to bring in second external member into the governing council

The Bank of Canada is adding a second outside voice to its governing council in a bid to diversify the views around the table when it sets interest rates.

 

The central bank announced Thursday that it has begun the recruiting process for a second external deputy governor – a part-time position with a two-year term with the possibility of an extension. The role was created last year to augment the expertise of the bank’s governor and deputy governors, who serve longer terms and work full-time as top-level officials at the bank.

 

The appointment will bring the bank’s governing council, which sets interest rates and makes other monetary policy decisions eight times a year, from six to seven members.

 

Nicolas Vincent, an economics professor at HEC Montréal, became the first external deputy governor last year. The bank said Thursday that it has extended his appointment by a year, to March, 2026.

“As the bank navigates an increasingly complex and fast-changing economy, the creation of a second external Governing Council role will add further perspective and bring different skills and experiences to the table,” Governor Tiff Macklem said in a statement.

 

When the position was created in 2023, some commentators thought the bank would bring in someone with a different professional and educational background than the other members of the council – possibly a business executive or banker. In the event, the bank went with an economics professor.

 

The new external deputy governor will join the bank in the middle of a monetary easing campaign. The bank has cut interest rates by a quarter-percentage-point three consecutive times since June, bringing its benchmark policy rate to 4.25 per cent. Financial markets expect the bank to keep cutting through the rest of this year and the first half of next year.

With inflation back near the bank’s 2-per-cent target, policy makers are keen to get borrowing costs back to a more normal level to avoid tipping the economy into recession and overshooting the inflation target on the way down. The big question right now is how fast the bank will move and whether it will increase the size of rate cuts.

 

The bank’s board of directors has hired recruitment firm Boyden to conduct an external search process. The job posting says that the candidate must have knowledge of economics and the financial system, and experience “at a very senior level in business, financial markets, a policy-making environment, or academia.”

 

“The bank welcomes a variety of experiences, viewpoints and backgrounds in decision-making,” Claire Kennedy, lead independent director, said in a statement.

 

 

 

This article was first reported by The Globe and Mail