Will a new Bank of Canada governor shake up interest rates?
Mark Carney's successor as governor of the Bank of Canada is not expected to implement a radical change in interest rate policy and most likely will hold the current underlying philosophy.
Mark Carney, the current governor of the Bank of Canada has recently announced he will be stepping down from his position next June, to accept the title of governor of the Bank of England. This announcement has caused speculation regarding the future of interest rates, but it is believed that a new governor will not have an effect on the way the institution conducts itself as a whole.
Canada's central bank has a target of 2% for inflation, meaning that interest rates will be raised if that target is exceeded. With recent Canadian economic growth, it is predicted that inflation will rise into 2013, meaning there is a chance interest rates could rise. However, most economists are predicting a very moderate increase, meaning interest rates would still be sitting at historic lows. Louis Gagnon, a finance professor at Queen's University School of Business is careful to point out that any actions taken would be the same whether Carney was the central bank's governor or not. "I think the Bank of Canada as an institution, not only the governor, but the body, is hawkish. I'd be very surprised if they were to select someone who has a different philosophy, because that person would not sit well with that group of people,” Gagnon stated.
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