Every six weeks, in a windowless room in the bowels of a glass-encased building down the street from Parliament, a dozen reporters wait in the early morning with their fingers poised above their laptops.
As the appointed moment arrives, the seconds are counted down -- "10, 9, 8, 7…" -- by a hovering communications assistant until at zero, the reporters each punch a button to flash Bank of Canada Governor Mark Carney’s latest interest-rate announcement across the country and beyond.
With the power to move markets and impact the wallets of every Canadian, Carney’s decisions are awaited like those of no one else in the country.
And the central bank’s attempts to keep Canadian business conditions on an even keel have never been more closely watched than in the past two years, as Canada followed the rest of the world into the worst recession in a century.
It’s been a trying time for Carney, who took over at the Bank on Feb. 1, 2008, a mere nine months before the tremors from the U.S. housing collapse erupted into a global financial crisis.
Now, heading into the fourth year of his seven-year term, he has helped Canada weather the global downturn. But Carney finds himself pondering an unexpected challeng -- how to help guide the country through a gloomy period of sub-par economic growth in the wake of the recession.
While the Harper government is trumpeting the success of its economic stimulus program, Carney is warning that the trials and tribulations from the recession are not going to quickly fade away.
"This is going to be a different form of recovery globally, and that has real implications for Canada," he told the Toronto Star.
Canadian entrepreneurs are going to have to work harder and individuals who have taken on too much debt could be at risk of going broke if there is another adverse economic shock, he warns.
"These are extraordinary times -- the challenges we face have only just begun."
It’s probably not a message that Carney, the original whiz kid, would have expected to ever be delivering when he stormed into Ottawa to join the public service in 2003. His original appointment to the central bank—as deputy governor—came after a decade as an investment banker at Goldman Sachs, one of the high-flying banking houses that nearly went under when the financial house of cards collapsed two years ago.
And it can’t have escaped Carney’s notice that he is now among the cadre of regulators and world leaders trying to pick up the pieces from the meltdown caused by Wall Street’s excesses.
The scale of the financial mess facing the world after the 2008-09 recession is bigger than most people could have imagined, he told the Star in an interview.
And for those few who did imagine it, "it’s one thing to talk about it, it’s another thing to start living through it," Carney said with characteristic dry wit.
"Private debts are very quickly becoming public debts," he explained, referring to the huge deficit financings mounted by governments to sustain economic demand when business and household spending slumped in 2008.
With an eye toward Ireland, Portugal and Spain, he added that the result is "putting a number of countries in fiscal difficulty."
The gist of Carney’s wake-up call is that the prospects for Canada, which is still dependent for prosperity on a robust United States economy, are bleak.
Canada’s economy, which appeared to be roaring back to life a year ago, has already slowed markedly and is likely to experience a prolonged period of modest to sluggish growth.
Given the scope of the calamity the world has been through, it’s not surprising that Carney has become by all accounts the most activist central bank head ever seen in Ottawa.
In April 2009, Carney took the unprecedented step of lowering the Bank’s trend-setting overnight rate to the near bedrock level of 0.25% and vowing to keep it there for a year.
With conditions looking up last spring, Carney felt it necessary to begin raising the Bank’s overnight rate by 0.25% in June as a hedge against a possible burst of inflation. And by early September, it had reached 1 per cent, where it still sits.
There has been criticism that he acted too quickly and, in doing so, delayed the needed recovery in the jobs market and accelerated upward pressure on the exchange value of the loonie, a trend that makes Canada’s exports less competitive abroad.
But the Bank governor maintains that it was important, throughout the recession, to reassure Canadians about the prospects for growth. "We were off a bit, but directionally, we were absolutely right" in the Bank’s predictions, he said.
Although, at 45, he is the youngest central bank governor among G8 countries, Carney’s role as one of the stewards of Canada’s relatively stable financial system has imbued him with considerable credibility -- even being named one of the globe’s most influential people by Time magazine.
The past few years have been a tumultuous time in the normally staid halls of the central bank. And it’s likely to stay that way for some time because, as Carney says, the recession isn’t really over -- it’s only changed.
“Now, we are out of that easy bit,” he told the Star. Federal and provincial stimulus programs, which together are pumping nearly $60 billion into the economy, are coming to an end. And the boom in the housing sector “can’t go on forever,” Carney said.
He has signaled that, barring an unexpected uptick in the Canadian economy, the bank will keep interest rates low to spur business activity.
But "we are going to need to find new sources of growth," he said.
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