* Carney not explicit on how long rates will stay on hold
* BoC watching for 2 pct growth, cooling debt, inflation
OTTAWA, April 21 Bank of Canada chief Mark
Carney said he is unlikely to raise interest rates until
economic growth surpasses 2 percent and inflation quickens,
adding that personal debt levels and the housing market will
also influence the timing of his next move.
The conditions for hiking rates are implied in the bank's
mandate to target 2 percent inflation, but Carney laid them out
more bluntly than he has in the past in an interview with Global
National Television that aired on Sunday.
After leaving the bank's key rate unchanged last week but
insisting the next move would be up, he said three factors would
determine how long the rate would be on hold.
"First, the economy needs to grow above its so-called
potential rate of growth. So it needs to grow more than 2
percentage points. Secondly, you need to see a continuation of
what is becoming a positive evolution of household debt and
aspects of the housing market," he said in the interview, which
was taped on Wednesday.
"So we need to see those aspects and also inflation picking
up a little bit before we would move," he said.
Carney, who leaves the Canadian central bank in June to take
over at the Bank of England in July, was the first central
banker in the Group of Seven industrialized nations to tighten
monetary policy after the global financial crisis, with three
successive hikes in 2010.
He resumed talk of rate increases a year ago but
progressively softened his tone after growth unexpectedly
On Wednesday, in addition to extending the 2-1/2 year rate
freeze, the central bank chopped its 2013 growth forecast to 1.5
percent from 2 percent. On a quarterly, annualized basis, growth
won't pass the 2 percent mark until the third quarter of this
year, it predicted.
Carney said this week he was pleased to see a cooling of
record-high household debt levels and a moderation in the
housing market from the bubble-like conditions of a year ago.
He took partial credit for the improvement, citing the
bank's own talk of rate hikes as well as the government's move
to tighten mortgage rules, although he said it was too early to
raise a "mission accomplished" banner.
On the inflation front, there is little pressure to hike
rates, with annual inflation slowing in March to 1 percent -
well below the bank's 2 percent target.
The bank on Wednesday said inflation would "remain subdued
in coming quarters before gradually rising to 2 percent by
mid-2015 as the economy returns to full capacity."
In a Reuters poll conducted before the bank's new forecasts
this week, economists expected no move by the bank until the
third quarter of 2014.
Markets have priced in a small chance of rate cuts later
this year, according to yields on overnight index swaps which
trade based on expectations for the policy rate.