"With interest rates near historic lows, the Bank of Canada doesn’t have much conventional ammunition to fight a major downturn, a problem faced by most other central banks. That’s aggravated by Canada’s extremely high household debt levels, which will make policy makers even more reluctant to lower borrowing costs.

The end result may be a growing reliance on fiscal policy to manage slowdowns, in coordination with the Bank of Canada in a relationship that could be formalized as early as 2021 when the central bank completes a mandate review.

“It’s pretty clear we are reaching limits to what central bankers can do with conventional instruments,” Perrault said. “That’s going to place a premium on policy coordination. We will need somebody that understands the linkages between monetary and fiscal policy, and how coordination between these policies can and should be executed while maintaining the central bank’s independence.”