Morneau names Tiff Macklem new Bank of Canada governor | Canada News Media
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Morneau names Tiff Macklem new Bank of Canada governor

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OTTAWA —
Tiff Macklem, a former second-in-command at the Bank of Canada, is returning to the central bank to take over the top job at a moment that he says cries out for bold, unprecedented responses to the economic crisis fuelled by COVID-19.

And he suggested that once the current crisis passes, a key focus for the bank will be how climate change will shape the economy, productivity, spending, and ultimately prices.

But seated alongside the man he will replace, Stephen Poloz, and Finance Minister Bill Morneau, Macklem said there is a “need to try and overwhelm the crisis” to stabilize the economy and “restore confidence.”

So far, the central bank has slashed its target overnight interest rate to 0.25 per cent and started an unprecedented bond-purchasing program to fund federal fiscal stimulus that stands at over $146 billion.

All of that would qualify as “bold, unconventional policy responses” that embrace the idea that “you’ve got to think beyond the normal responses,” said Macklem, now the dean of the business school at the University of Toronto.

He cautioned against negative interest rates, calling them too disruptive for an already disrupted financial system, adding he was comfortable with 0.25 per cent being as low as the bank would go.

“It’s really critical that credit keep flowing, that (businesses) can borrow money to get them through this and a critical function of the Bank of Canada is to provide the liquidity to keep the financial system functioning,” Macklem said.

“As the restrictions are lifted, the economy will start to bounce back, it’s not going to be a snap back to normal. It’s going to be a phased approach, where this virus is going to be out there for some time and the Bank of Canada will play its role.”

The bank controls the country’s money supply, trying to support economic growth and stability while keeping inflation on target. As well, the governor’s statements about the economy and the financial system set trends and move markets — all roles Macklem knows well.

Macklem was the No. 2 at the Bank of Canada just over a decade ago as Canada emerged from the global financial crisis, and played a senior role within the central bank during the crisis itself. Claire Kennedy, who chaired the bank’s recruitment committee that recommended Macklem, said in a statement that background was part of the reason Macklem was tapped for the job.

Finance Minister Bill Morneau said what the bank and government were looking for was “someone with the deep expertise and understanding not only of the Canadian economy, but the global economy and the current challenge.”

Macklem has taken an interest in recent years in the role of artificial intelligence in the economy, as well as climate change. Last year, he led a government-struck panel that recommended the creation of tax credits to encourage Canadians to put their retirement savings into climate-conscious investments.

“Climate change is a major force that’s going to be impacting the economy, like globalization, like technological change,” Macklem said Friday.

“We will be looking at climate change along with a host of other major economic forces acting on the economy to the extent that they affect inflation.”

By naming Macklem as the bank’s 10th governor, the government highlighted the need for “institutional stability” at the Bank of Canada, wrote CIBC chief economist Avery Shenfeld, and he is unlikely to represent a major change at the central bank.

Born in Montreal, Macklem was considered a top candidate to become governor in 2013, but was passed over when Poloz was appointed. Similarly, Carolyn Wilkins, the bank’s current No. 2, was considered high on the list of successors when Poloz steps down from the job on June 2.

Poloz called leaving the his dream job as governor “bittersweet.”

“Every governor understands that you are a steward,” he said, “and handing over the reins to someone as capable as Tiff Macklem means the bank and its role in supporting Canadians is in solid hands.”

This report by The Canadian Press was first published May 1, 2020

 

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Netflix’s subscriber growth slows as gains from password-sharing crackdown subside

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Netflix on Thursday reported that its subscriber growth slowed dramatically during the summer, a sign the huge gains from the video-streaming service’s crackdown on freeloading viewers is tapering off.

The 5.1 million subscribers that Netflix added during the July-September period represented a 42% decline from the total gained during the same time last year. Even so, the company’s revenue and profit rose at a faster pace than analysts had projected, according to FactSet Research.

Netflix ended September with 282.7 million worldwide subscribers — far more than any other streaming service.

The Los Gatos, California, company earned $2.36 billion, or $5.40 per share, a 41% increase from the same time last year. Revenue climbed 15% from a year ago to $9.82 billion. Netflix management predicted the company’s revenue will rise at the same 15% year-over-year pace during the October-December period, slightly than better than analysts have been expecting.

The strong financial performance in the past quarter coupled with the upbeat forecast eclipsed any worries about slowing subscriber growth. Netflix’s stock price surged nearly 4% in extended trading after the numbers came out, building upon a more than 40% increase in the company’s shares so far this year.

The past quarter’s subscriber gains were the lowest posted in any three-month period since the beginning of last year. That drop-off indicates Netflix is shifting to a new phase after reaping the benefits from a ban on the once-rampant practice of sharing account passwords that enabled an estimated 100 million people watch its popular service without paying for it.

The crackdown, triggered by a rare loss of subscribers coming out of the pandemic in 2022, helped Netflix add 57 million subscribers from June 2022 through this June — an average of more than 7 million per quarter, while many of its industry rivals have been struggling as households curbed their discretionary spending.

Netflix’s gains also were propelled by a low-priced version of its service that included commercials for the first time in its history. The company still is only getting a small fraction of its revenue from the 2-year-old advertising push, but Netflix is intensifying its focus on that segment of its business to help boost its profits.

In a letter to shareholder, Netflix reiterated previous cautionary notes about its expansion into advertising, though the low-priced option including commercials has become its fastest growing segment.

“We have much more work to do improving our offering for advertisers, which will be a priority over the next few years,” Netflix management wrote in the letter.

As part of its evolution, Netflix has been increasingly supplementing its lineup of scripted TV series and movies with live programming, such as a Labor Day spectacle featuring renowned glutton Joey Chestnut setting a world record for gorging on hot dogs in a showdown with his longtime nemesis Takeru Kobayashi.

Netflix will be trying to attract more viewer during the current quarter with a Nov. 15 fight pitting former heavyweight champion Mike Tyson against Jake Paul, a YouTube sensation turned boxer, and two National Football League games on Christmas Day.

The Canadian Press. All rights reserved.

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