HIGHLIGHTS-Bank of Canada's Carney speaks in British Columbia

Mon Oct 15, 2012 4:52pm EDT

Oct 15 (Reuters) - Below are key quotes from an appearance by Bank of Canada Governor Mark Carney in Nanaimo, British Columbia:

ON THE OUTLOOK FOR MONETARY POLICY

"Monetary policy is very accommodative right now and is likely to remain so for some time."

ON THE PROSPECT OF ENTERING POLITICS:

"I definitely don't want to answer that. Look, I am doing my job. I am going to do my job. It's pretty simple, I've got two years and change, at least, left on my mandate."

"Why don't I become a circus clown? I appreciate the great concern about my career but I have gainful employment and I intend to continue it."

ON MONDAY'S HOUSING DATA:

"I wouldn't put too much weight on one data point. There is a transition during the summer and into the early part of the fall where both the new underwriting standards of OSFI (Office of the Superintendent of Financial Institutions) and the most recent steps that the federal government has taken on mortgage insurance rules, both of those coming into effect, so there is always going to be some volatility in the data associated with that."

"Just to be clear, broad brush, we have expected the contribution of housing (to growth) to slow and to reduce. We'll update precisely how much in the course of the next ten days or so."

"To put this in perspective, housing as a percentage of GDP has been running well above its historic average for several years now, and things come back down towards their averages. That's entirely reasonable to expect. We do expect adjustment over the medium term."

"What that means is housing will not be an outsized contributor to Canadian growth."

"We see that valuations in some markets have become stretched and we would expect an adjustment over time in those valuations."

ON HOUSEHOLD DEBT:

"If we ever were to do it (use monetary policy to lean against household debt), absolute hypothetical, then we would be very transparent that we're doing it, why we're doing it, and what we expect the impact to be."

"With respect to the situation in household debt and housing finance in Canada, as you know, the government of Canada has taken action on four occasions  to address some issues in mortgage finance and our view, we've said this on many occasions and I'll reiterate today, those actions have been both timely and prudent. OSFI has taken measures to enhance underwriting standards for housing related debt  and also banks are in the process of raising capital towards Basel III capital standards, so the sum of those actions are still having an impact on the adjustment in housing finance. And so we, like the government, like OSFI, and the private sector for that matter are watching with great interest the sum of those policies and the effect on the evolution of household debt."

"The point was a hypothetical one to ensure that people properly understand our overall monetary policy framework. Action has been taken. We've always said that monetary policy is the last line of defense."

ON THE HOUSING MARKET:

"We are expecting an adjustment ... we will update our full forecast in the course of the next 10 days and release that with the Monetary Policy Report. We have been expecting a slowing in the housing market. We're seeing some signs of that and there is some desirability obviously ... to (see) an easing there but we continue to watch the situation along with others very closely."

ON INFLATION MANDATE:

"Our mandate in the end on the monetary policy side is very simple ... to ensure that inflation is averaging around 2 percent total CPI inflation in Canada. And so we'll conduct monetary policy to ensure that irrespective of what happens outside of our shores."

ON C$ VALUE VS EMERGING MARKET CURRENCIES

"Over time it is reasonable to expect that the value of those (emerging market) currencies are going to appreciate relative to the Canadian currency, which is going to continue to make us more competitive and effective."

ON BUSINESS INVESTMENT:

"One of the consequences of a strong currency is on the cost of investment goods. A lot of investment goods are imported, which creates an opportunity obviously to boost productivity and we have seen evidence of firms taking advantage of that across the country, the manufacturing sector in particular."

"Given where productivity is at the moment relative to our major competitors, not just the United States but also including say Mexico for example, we have a sustained need as a country to continue that investment and it's important therefore we think to put global uncertainty in context."

ON THE STRONG CANADIAN DOLLAR:

"It's one of the headwinds on our economy, it's one of the reasons monetary policy is as accommodative as it is."

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