David Dodge, the gravel-voiced central bank governor who stifled inflation and carefully steered the Canadian economy through the tech-wreck and 9/11, has announced that he will not seek a second term.
The 63-year-old, known for his relentless drive to make Canadians understand more about economics and monetary policy, will wind up his seven-year tenure at the end of January, 2008.
While he did not have to make a public decision about his future until June, when the bank's board of directors was to start its search for the next governor, he chose to quiet the rumour mill by making his announcement early.
“While Governor Dodge's term continues until 31 January 2008, he indicated he is making his plans known well in advance to facilitate the selection and appointment of his successor,” the central bank said in a statement.
“He's been quite remarkable in the context of all the shocks we've had,” said Craig Wright, chief economist for Royal Bank of Canada.
Since he succeeded Gordon Thiessen in 2001, Mr. Dodge has overseen the Canadian economy as it dealt with a U.S. recession, the bursting of the high-tech bubble, the terrorist attacks of September, 2001, the corporate governance crisis, the commodities boom, regional disparity within Canada, and the Canadian dollar's meteoric rise from 63 cents (U.S.) to its recent heights above 90 cents.
Throughout it all, the Canadian economy grew steadily and inflation remained close to the central bank's target of 2 per cent.
“What more could you ask? We're almost bang on the 2-per-cent target for his entire term,” said Don Drummond, chief economist at Toronto-Dominion Bank.
Inflation has started to show some signs of bubbling up lately, and central bank will have to tread carefully with its interest rate policy even as Mr. Dodge is heading out the door, Mr. Wright added.
Mr. Dodge will take questions today on his future, after he releases the bank's semi-annual outlook, a spokesman said.
Speculation among bank-watchers immediately turned to who would replace Mr. Dodge, and there seems to be no leading candidate. Mr. Dodge is one of the few governors to be named from outside the central bank, but it's not clear whether the bank's search committee will return to tradition and name the next governor from within its ranks.
Senior deputy governor Paul Jenkins and deputy governor Tiff Macklem top an insider list of possibilities, along with Bill White at the Bank of International Settlements in Switzerland. But many bank-watchers wager that the next governor will come from outside – perhaps Mr. Drummond, or senior Finance Department official Mark Carney, or clerk of the privy council Kevin Lynch.
Mr. Dodge, a pipe-smoker who is spotted frequently taking brisk walks around the Parliament Hill grounds or chatting with bank employees while they smoke outside, has a “common touch” that is rare in a central banker, Mr. Drummond said.
An eclectic thinker who believes strongly that the world benefits from vigorous debates of ideas, Mr. Dodge saw public education as one of his key responsibilities. He almost succeeded in getting “output gap” accepted in common parlance, Mr. Drummond quipped.
In his previous job as deputy finance minister, Mr. Dodge was also the mastermind behind then-finance minister Paul Martin's quick elimination of the $42-billion deficit. The budget cuts required to defeat the deficit pummelled health care and strained the Ottawa's relationship with the provinces. But the measures, in the end, were widely supported and set Canada's economy on a sustainable track.
“Governor Dodge has served Canada in the finest tradition of central bankers, and his influence has been felt not only here but around the world. In particular, his strong leadership during the turbulent post-9/11 period has helped Canada lead the Group of Seven countries in economic growth,” Finance Minister Jim Flaherty commented in a statement.
© The Globe and Mail
