HIGHLIGHTS-Bank of Canada's Carney speaks in Ottawa

TORONTO May 16 (Reuters) - Canadian inflation will remain above 3 percent for now, surpassing the central bank's target range, Bank of Canada Governor Mark Carney said in speech on Monday. [ID:nN16281097]

Following are comments from Carney following his speech.

ON CAPITAL INFLOWS

"Canada has a true commitment, a sustained commitment to openness in trade and very much so in capital markets."

"We've been one of the most open capital accounts since the Second World War and certainly since the end of the Bretton Woods system. There is no reason to change that."

"The vigilance to which I was referring relates to the fact that it's as the capital comes in and then gets deployed. It's how well it's deployed. It's more supervisory and oversight vigilance because what tends to happen is if you have money coming in ... it can be quite easily misused."

ON FINANCIAL MARKET INFRASTRUCTURE

"This (proposal to take over the TMX) is a commercial situation and so we don't want to comment."

"But I will take the opportunity to emphasize that more broadly one of the priorities of the G20, and therefore of Canada, is to improve the financial market infrastructure, particularly with respect to derivatives."

ON IMF TROUBLES AND THE ECONOMIC RECOVERY

"The bottom line is we do not expect these issues to have a material impact on either the global recovery, or certainly the Canadian expansion."

"The IMF will continue to function and the near-term issues that need to be addressed, particularly in Europe, are in the process of being addressed."

ON ENERGY PRICES

"We have, unlike in most other advanced economies, there is a bit of an offset for the higher oil prices because of the strength of our currency which reduces the headline impact of oil on inflation in Canada."

"There will be upward impact on that (inflation) level in part because of higher energy prices."

"Much of these energy price increases are in the pipeline. The management of policy cannot be swung around for very short term movements, particularly in an economy where inflation expectations are very well-anchored."

"We have had historically very little evidence or experience of pass-through of those prices to broader inflationary pressures."

"We have made clear in our projections that policy will be adjusted over the projection horizon ... and the timing of that will be determined by a variety of factors."

"Our expectation is that those (Canadian profit) margins (on gasoline) are going to start to come down to more historic levels."

"On balance, we expect crude prices to be firm ... given the supply-demand dynamics."

ON WHETHER THE IMF'S LIPSKY WILL LIKELY STAY ON BEYOND AUGUST:

"My experience with him (John Lipsky) in addition to being the foremost -- one of the top economists, financial experts and bankers, bankers in the sense of the IMF -- is that Mr Lipsky has always been committed to the institution and committed to his work and so would continue that commitment if more were asked."

ON WHETHER HE WOULD BE INTERESTED IN JOB OF IMF MANAGING DIRECTOR

"I am not yet half-way through my term (as governor of the Bank of Canada) and I am interested in fulfilling my responsibilities. I understand the interest in the issue and the serious situation, but it's very early stages to make judgments about any of the specifics and what would come afterward."

ON INFLATION EXPECTATIONS

"We'll provide another full projection for inflation in July so I'm not going to go month by month. But over the balance of this quarter we do expect inflation to be above 3 percent -- that's total CPI inflation. That's ... largely driven by two factors: first is provincial taxes .... then secondly, energy prices, particularly gasoline prices."

"In addition, food price inflation has come in a little earlier (than) we had expected."

"Our indicators of inflation expectations are well-anchored. They're within historic ranges."

ON SUCCESSION AT THE IMF:

"We've always supported a merit-based process and we will continue to do so."

ON THE IMPACT OF IMF CHIEF'S ARREST

"What we have supreme confidence in is the ability of the institution to continue to discharge its responsibilities." (Reporting by Louise Egan, Randall Palmer and David Ljunggren in Ottawa and Ka Yan Ng, John McCrank and Alastair Sharp in Toronto; Editing by Jeffrey Hodgson)