Who Is Mark Carney? The Banker Who Could Lead Canada

One name keeps coming up as the possible successor to Justin Trudeau: Mark Carney. Carney is a well-known banker, and there's a good chance he'll defeat Chrystia Freeland for the leadership of the Liberal Party and become Canada's next prime minister, at least for a short while. If an election were held today his odds against the Conservative leader would be slim, but it's still worth knowing who the likely Liberal leader is and why he matters. I'm Moe Asgarian, Principal Real Estate Broker in Toronto, and I want to walk through the story of Mark Carney, a star of the banking world.

Who is Mark Carney?

Carney announced he's officially entering the Liberal Party's internal leadership race, and winning it would be a big achievement for him. Most polls suggest he has the better shot at leading the party, and you can see the Conservatives have made him their main target. They keep tying his name to the carbon tax at every turn. One card in Carney's hand is that he's never formally held an executive post in Trudeau's government. Yes, he was an economic advisor to the Liberals, but he was never a minister. Ironically, his brightest years in Canada came under a Conservative prime minister, Stephen Harper.

The banker who steered Canada through 2008

Carney was Governor of the Bank of Canada during the recession, and later Britain hired him to help manage Brexit with as little bleeding as possible. Stephen Harper was prime minister from 2006 to 2015 and led the Conservative Party. In 2008 he chose Carney as central bank governor and gave him full authority at the height of an economic crisis unlike anything since 1930. In that year banks went under, the housing market collapsed, and billions of dollars in wealth evaporated. Canada, with Carney's help, came through it standing tall. I still remember that back then the Canadian dollar traded at par with the U.S. dollar, and at one point it was even worth more. Carney was part of Harper's successful policies, and the Conservative Party still proudly points to that economic management as part of its record.

The rate cut that set him apart

So what exactly did Carney do? He understood earlier than everyone else what needed to happen. The main move was this: as soon as he took office, in his very first month, he cut the interest rate by half a point. Neither Europe nor the United States did that at the time. And he didn't stop there. In a short stretch he brought the rate down by a full point and a half, which was a genuinely bold step. His logic was that lowering rates gets people borrowing and spending, and that brings the economy back to life. What did everyone else do? They hesitated. The European Central Bank even raised rates at first, then realized the mistake and cut them quickly after Canada did. Everyone gradually walked it back, and the one who came out with his reputation intact, because he did it first, was Carney.

The forward-guidance tradition he started

Carney did something else that's still a tradition in Canada today: the central bank explaining its view of the future. As you've seen, when the Bank of Canada decides on rates, it holds a session and shares its outlook on the economy too. The governor might announce that the rate is coming down half a point and, at the same time, paint a picture of what's ahead for people and investors. Carney started this good habit. Before him, the Bank of Canada would announce its decision and move on to the next one. His view was that the central bank's forecasts and analysis could themselves help the economy. If the bank is worried about something, it should say so, so the economy can prepare. Back in those years people knew rates would stay low for a long time, and psychologically that helped the market and the economy a great deal. Canada was the only G7 country where no bank failed during that period, and it moved past the crisis quickly with Harper's economic policies. That same résumé is why Britain later brought Carney in for a sensitive, important period, and he succeeded there too.

From central banking to a leadership race

All of that aside: yes, Carney is a first-rate banker and financial manager, but we're talking about party leadership and the prime minister's office. He tries to present himself as someone who came from outside the Liberal Party, without a post in Trudeau's government. The reality is that over these years he's been an economic advisor to the party. There are also reports that he recently had friction with the policies of Chrystia Freeland, the finance minister who was effectively deputy prime minister. In fact the main reason for Freeland's resignation is said to be that Trudeau had decided to put Carney in her place as finance minister. The situation has become so tangled that it's unclear how ready Carney, who isn't even a member of parliament, is for an election campaign. First he has to beat Ms. Freeland and be recognized as Liberal leader, and then, at the federal level, take on a popular and tough rival like Poilievre.

What's your read on Mr. Carney? If you're weighing how all of this touches your own plans to buy or sell, fill out the form at the bottom of this page or book a free consultation. Stay well and take care.