Federal Reserve’s loss is Bank of Canada’s gain

March 3, 2016

The Federal Reserve Bank of San Francisco produces some of the U.S. central bank’s best research on labor markets and monetary policy. And it’s from there that the Bank of Canada plucked its newest deputy governor,

A man is reflected in a window while walking past the Bank of Canada office in Ottawa, Canada July 16, 2015. REUTERS/Chris Wattie

A man is reflected in a window while walking past the Bank of Canada office in Ottawa, Canada July 16, 2015. REUTERS/Chris Wattie

Sylvain Leduc, who runs the key microeconomic and macroeconomic files at the Fed’s westernmost branch. “I’m going to miss him terribly. Our loss is their gain. I could see Sylvain as having unlimited future … because he’s a guy with multiple talents and he’s extremely nice, extremely collegial.”

Those are the warm words of Leduc’s boss, Mary Daly, associate director of research at the San Francisco Fed. Little known on Bay Street – Canada’s Wall Street equivalent – the Montreal native and dual citizen has clamored up the central banking ladder south of the border and built a body of research that is hard to pin on a specific topic or two: he’s written papers on commodities and currencies, financial leverage, infrastructure spending and monetary communications, among other issues.

The American debate over what to do with interest rates is far louder and more antagonistic than that of Canada, with dissents often aired publicly and forcefully by some of the Fed’s 19 independent policymakers. One paper that San Francisco Fed President John Williams has brought to the debate is Leduc’s work on how an “uncertainty shock” influences unemployment, productivity and output in an economy.

“He is someone who dives in and tries to say to what extent history tells us something, what are we missing, and what can we add to the model,” Daly said of Leduc. “He goes in that middle ground – it’s hard territory to be in – and tries to think carefully about what could be different that we could model … that will help us understand current outcomes.”

Beginning May 2 in Ottawa, Leduc will co-head the Bank of Canada’s financial systems activities – one topic on which he hasn’t appeared to have focused. Yet he has penned several papers related to Canada’s issue du jour, the global oil shock that has put the economy on edge. Leduc is well prepared for that challenge, said Daly. “He has this really great ability to teach others how to think about the world the way he’s thinking about it, to educate others about his point of view, and also to take in new ideas.”

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