The Bank of Canada wants to reinvigorate its interest-rate setting process, bringing an outside voice to the table next month amid a broader effort to bolster its credibility.

HEC Montréal economics professor Nicolas Vincent will become the first “non-executive” member of the central bank’s six-person governing council after its March 8 decision. He is set to serve as part-time deputy governor for two years, with an option for a third, instead of the longer, full-time terms typically given to policymakers.

That quicker turnover “will bring new ideas, new diversity, new thinking into the Bank of Canada,” Governor Tiff Macklem told reporters in Quebec City this week. Calling him an outstanding scholar and teacher, the central bank chief cited Vincent’s research on inflation, price dispersion, household finance and inequality as welcome new expertise.

“I’m very excited about the appointment,” Macklem said. “I have every confidence he’s going to make a very important contribution to our deliberation.”

Vincent’s appointment may bring new perspective to the institution’s forecasting methods, which policymakers concede failed to adequately predict last year’s surge in inflation. Consumer price gains spiked to a 40-year high of 8.1 per cent in June and have since fallen to 6.3 per cent — still more than three times the Bank of Canada’s target.

That prompted Macklem and his officials to deliver eight straight hikes, a policy U-turn that brought the benchmark overnight rate to 4.5 per cent from the emergency low 0.25 per cent that held through the pandemic. But after last month’s increase, the bank is moving to the sidelines to assess the impact of sharply higher borrowing costs on the economy.

Born in Trois-Rivières, Quebec, Vincent studied economics at HEC Montréal and Queen’s University before receiving a PhD from Northwestern University in Illinois. 

He joined the faculty at HEC, the business school at Université de Montréal, in 2007. “This was a bit of a coup for us,” Jean Boivin, the head of research at BlackRock Inc., said by phone.

Boivin, a former deputy governor himself, taught at HEC at the time and served as a mentor to Vincent. He praised the appointment, and said the Bank of Canada will benefit from both his macroeconomic expertise and his communications skills.

Vincent’s experience instructing masters students will be helpful as he joins the Bank of Canada’s consensus-based governing council, Boivin said. “Teaching MBAs successfully requires you to be able to drive the discussion with some assertion, but at the same time like a good facilitator of discussions in the classroom.”

The new deputy governor’s term begins March 13, bringing the bank’s governing council back to a full complement of six members ahead of the the April 12 decision. Vincent replaces Tim Lane, who retired last year.

Coupled with new summaries of policy deliberations — published for the first time Wednesday — the appointment marks one of the biggest changes to Bank of Canada decision-making in years amid a time of intense public scrutiny. 

To Boivin, the move is part of a trend among central banks globally to bring a wider set of views to the table “to make sure that we are not subject to group-think of any sort.”