Nov 8 Below are key quotes from an appearance by
Bank of Canada Governor Mark Carney on Thursday in Montreal:
CARNEY ON DISPOSABLE INCOME AND RISKS
"We have a fairly modest outlook for the growth of
disposable income. We don't disclose it. We don't have a sharp
increase in the growth of disposable income and you see some of
that in our implied consumption forecasts, or forecasts for
household consumption, which is growing roughly at 2 percent
over the forecast horizon. So modest growth in consumption."
"I wouldn't say we would think that there's a lot of
downside risk to the income side since it's relatively modest.
So the risk, if I follow your question, I think your risk is,
could ... the debt ratio not stabilize and continue to go up and
why would that happen? So in our forecast, the reason it would
(be) less likely (to) happen is because borrowing continues,
including home equity extraction and financing of renovations or
CARNEY ON HOUSING STARTS:
"On the housing starts, they're slower than they were but
they're still running above demographic demand, or household
formation to be more precise."
"We still see, as we highlighted in the MPR (Monetary Policy
Report), that housing starts, particularly multiples, condos,
are well above historic averages, even adjusting for population.
And I remind you that in our forecast we're expecting this
decreased contribution from housing relative to GDP ... and in
fact drag from the housing sector on growth from now and so
we're starting to see some things that are consistent with that,
so it's entirely consistent with expectations ... it's very
unlikely that you're going to have a sector that's going to grow
faster than GDP forever or else it's going to occupy all of
ON THE U.S. FISCAL CLIFF:
"This situation in the United States is serious ... it is
clear that a rapid fall in American growth would cause problems
for the Canadian economy. But as the minister of finance
underlined yesterday, the government of Canada has options, and
of course the Bank of Canada has options too. And as far as the
Bank is concerned, we could react quickly in case a difficult
situation arose in the United States."
- - - -
(Carney was asked whether the fiscal cliff was the biggest
current threat to the Canadian economy)
"At this moment, yes ... because it poses a big risk and
it's a risk that is almost immediate."
"If the U.S. were to persistently go over the fiscal cliff
... that could well have implication for policy here in Canada.
But the good news is that Canadian authorities have
CARNEY ON BOC GROWTH FORECASTS:
"We have a relatively weak forecast for the third quarter -
1 percent - and data is broadly in line with that. There are
some timing issues that drive some of the output in the energy
sector, which will shift some growth between the third and the
fourth quarter. That still seems to be in line. But I wouldn't
over interpret recent data and I certainly wouldn't draw any
connection to our monetary stance."