Feb 25 Below are key quotes from an appearance
by Bank of Canada Governor Mark Carney:
ON BANK OF CANADA GROWTH EXPECTATIONS:
"The Bank's forecast, if you look at it on a like-for-like
basis, relative to consensus ... if you look at when our
forecast came out, versus where consensus was, we're slightly
above, we're about 0.3 above, on average over last year on
growth ... if I had to pick one element, which explains that, I
would say the external side, it's the export side ... the export
performance has been lower on average than we had expected. Now
that's not the whole story. There's a few other elements there.
But if I wanted to restrict it down one to thing, I would do
ON EXPORT AND BUSINESS GROWTH
"We saw ... in the second half of the year last year
particularly weak export growth ... so there's still this
competitiveness element there."
"As (housing) growth is coming off ... it needs to be
replaced. And the pickup needs to come from business investment.
We see good intentions. There's good balance sheets, we're
seeing some signs on the corporate borrowing side, some of the
global uncertainty has come down, so we should see some activity
there. So we have expectations of solid business investment
(and) we stick by those. Maybe a little tougher is on the export
side, where we haven't seen that pickup there."
ON THE STRENGTH OF THE CANADIAN DOLLAR
"The (Canadian) dollar has been persistently strong for some
time and we have seen challenges on the export side, consistent
underperformance ... but we don't have a view that you
depreciate yourself to prosperity and we're not looking at any
target here. Building up the productive base of the country is
what continues to be required, which is another reason why that
pick up in investment is important."
ON INTEREST RATES OUTLOOK
"The view of the governing council, the Bank, in our most
recent decision was that given that the direction of
developments in the housing markets and given that there was
some more slack in the economy, that the need for - there's
still ultimately a need for some withdrawal of monetary policy
stimulus: interest rates are one percent, we are a very well
functioning financial system - but the prospect of that was less
imminent. And obviously we stand by that assessment."
ON HOUSING AND HOUSEHOLD DEBT
"We could be on the cusp of stabilization of the household
debt burden of Canadians. In other words it's going to stop
rising, and that obviously is welcome and something that we have
been focused on."
"As a whole, we are encouraged by developments and it
increases the prospect of a more sustainable evolution of
housing, household debt in Canada and that is positive for
medium-term growth prospects in this country."
ON WEAKNESS IN RECENT DATA
"In general, if you look at the risks to the outlook that we
had outlined in the MPR (Monetary Policy Report), the positive
and negative risks around the outlook, to inflation and output
in Canada, on the output side in the very near-term more of the
elements of the downside risks have materialized than the upside
"Inflation is pretty much tracking in line with expectations
at this stage. I don't want to overemphasize shorter-term data,
but there is a bit of that bias and I would say that,
particularly around the fourth quarter of 2012, we'll find out
shortly, but it might be slightly softer than we had forecast."
ON CANADIAN HOUSEHOLD DEBT
"What we're seeing in the Canadian economy is intended and
welcome because we have obviously been concerned - the
collective we - have been concerned about the pace of household
debt growth. So we're seeing that come down as a result of smart
decisions by consumers, households first and foremost, but also
a series of measures taken by the government, by OSFI (Office of
the Superintendent of Financial Institutions) and to a lesser
extent, the bias of the interest rate policy of the Bank of