Bank of Canada Governor Tiff Macklem has been closely involved in issues of inflation, interest rates and growth since 2022 and will be again next year. In 2023, he is our Personality of the Year, “Economy” category.
When drawing up a list of the most prominent figures in Canada, one would not normally think of this economic technocrat who carefully weighs each of his words before speaking and who would not have asked for anything better than to remain in the shadow this last year.
And yet, the Governor of the Bank of Canada, Richard Tiffany (Tiff) Macklem, could easily have been crowned person of the year in 2022 when, like several other central banks, his institution undertook an increase in its interest rates of a magnitude and speed not seen in almost 30 years in response to an increase in the cost of living that is as unexpected as it is extraordinary. Failing to be able to act on external causes of this surge in inflation — such as the effects of the COVID-19 pandemic on supply chains, the invasion of Ukraine on energy prices or natural disasters on agricultural production — the logic was to slow down demand by increasing the cost of credit for consumers and businesses.
Reluctantly, Tiff Macklem has once again risen among the personalities of the year in 2023. Although becoming more controlled, inflation has remained one of the main topics of conversation and concern. Having declined from an annual rate of just over 8%, in June 2022, to 3.1%, last November, it remains too far from the Bank’s 2% target and remains even higher at grocery store (4.7%) or in housing (5.9%).
Ironically, the rise in prices in the latter area is not only due to the chronic lag of supply compared to demand, but also to the increase in interest rates by the Bank of Canada. Usually far from making the headlines, all these stories about interest rates suddenly took a very concrete turn as Canadians, already heavily in debt, saw the amount of their mortgage payments jump.
It is very possible that Tiff Macklem will still remain one of the personalities of the year in 2024. Firstly because changes in interest rates are known to take 18 to 24 months before having their full effects on the economy and we will then be able to take the full measure of the brakes applied by the Bank of Canada with its rate increases over the past two years. Most economists are talking about a first half of the year of stagnation, and perhaps even a “slight recession”, which is already underway in Quebec and for which we will not fail, rightly, to blame the bank. central.
Once again in the spotlight despite himself, his governor should then have the chance to play a slightly less thankless role, the economic slowdown and the reduction in inflationary pressures allowing him to reduce (a little) his interest rates .
The finalists: Sophie Brochu, Michael Sabia, Pierre Fitzgibbon and Claudia Goldin.