Cause and effect

Poor Tiff Macklem, governor of the Bank of Canada. Today he boosted interest rates to 3.25 percent from 2.5 percent and the TSX managed to rise only 150 points, about the same as yesterday’s downturn. Analysts yawned even though rates in Canada are now higher than almost every nation from New Zealand to Sweden. Macklem is the Rodney Dangerfield of central bankers.
The name “Tiff” comes from Macklem’s middle name, Tiffany. He has a PhD in economics and was for six years dean of the Rotman School of Management at the University of Toronto. It was there I saw him a few years ago at an event billed as a speech by former prime minister Paul Martin followed by a question-and-answer session.
The event was seared into my mind because it seemed to me that Macklem turned it into more of a showcase for himself than his guest. Macklem remains his best press agent. He makes regular appearances on BNN Bloomberg and in August wrote opinion pieces for National Post and La Presse. For all his effort he’s not even a household name in his own household.
Macklem was appointed governor in 2020 to replace Stephen Poloz, the man who got the nod for governor over Macklem in 2013. Before Poloz was another winner, Mark Carney, who began his seven-year term in 2008 but left after five-and-a-half years to become governor of the Bank of England. When that prize post ended, Carney wrote a bestselling book, joined one among the many Brookfield companies, and is about to become chair of Brookfield Asset Management Ltd. where he’ll make gobs of money.
To be sure, Macklem has been occupied with international finance for decades. There’s a photo showing him with U.S. Federal Reserve Chairman Ben Bernanke and U.S. Treasury Secretary Hank Paulson at a meeting of G7 finance ministers. The photo was taken on October 10, 2008, when they acted boldly so there would be no more investment firms like Lehman Brothers going bankrupt.
But Macklem looks like he’s lost that past bravado. Early in his term as governor, Macklem mistakenly said that inflation would stay under 2 percent. Last year he appeared paralyzed while inflation rose to 6 percent. In the last six months he has triggered five hikes. After doing too little in the early going, what if he’s doing too much too late? If a recession arrives in Canada, we’ll never know whether he saw it coming or caused it.