Aug 22 Below are quotes from an appearance by
Bank of Canada Governor Mark Carney in Toronto:
ON STRENGTH OF CANADIAN DOLLAR:
"We take the currency into account in setting the monetary
policy. It is a very important relative price, it is one of the
headwinds. We have signaled consistently about the persistent
strength of the Canadian dollar and the challenges that brings
to our economy. It has consequences for the stance of policy in
this country. But ... the dollar is not the sole answer to our
challenges on the export side. The structural orientation of our
economy, unfortunately is too much north-south, not enough
east-west in a global sense. And that's going to take a while to
change and there's no sense pretending that's not the case."
ON POSSIBLE RATE INCREASES:
"There are a few factors here: one is the relatively modest
level of the output gap. Secondly the evolution of the Canadian
housing market - we're starting from a position of near-record
activity, certainly as a proportion of GDP.
"The last thing is that rates are very, very low. They are
lower here than they are in any other non-crisis economy and so
stimulus is considerable."
ON PROGRESS ON EUROPEAN DEBT CRISIS:
"The actions of the ECB are important, very important. There
has been continued progress on some of the reforms in the major
economies in Europe. There are other challenges in some of the
peripheral economies that have become a little more acute in
recent weeks as well. But the situation is, as we say, contained
but remains acute, and I would always distinguish in Europe
between measures which create a time period for the underlying
adjustments to take place, and the underlying adjustments.
"And we very much welcome important measures, including
signals from the ECB's governing council a few weeks ago, those
are very important."
ON POTENTIAL SHIFT IN VALUE OF CANADIAN DOLLAR:
"If there were a shift, a dramatic shift in the currency,
one would not expect us to achieve as much as some might think."
ON RECENT ECONOMIC DATA
"The recent data has been soft. ... There's still some slack
in the labor market."
"This is a message to Canadians: this is not a normal
recovery and expansion, it's not a normal cycle. We've got
fundamental challenges ... we have to face. This is going to be
a long slog."
ON COMPANIES PUTTING CASH TO WORK:
Shareholders have a role to play here, that if the companies
can't determine what to do with a very large cash pile, give it
back to the shareholders and they'll figure out what to do with
ON BUSINESSES BEING CAUTIOUS:
"The point we make to Canadian business is having the best
financial system in the world is only really of value if also
there in the tough times. We expect it to be there if there are
tough times. And so the level of caution could be viewed as
ON GLOBAL COORDINATION OF REFERENCE RATES SUCH AS LIBOR:
"In terms of where to next on Libor and similar reference
rates, there are a number of national processes that have been
set up. ... There will need to be international coordination of
these. These are rates that ultimately are important for a huge
swath of the global financial system and so we will do our
ON TARGETING LEVELS FOR THE CANADIAN DOLLAR
"We don't target, as you know, and it's a matter of some
debate, we don't target a specific level for the currency. What
is influencing the level of the currency are terms of trade.
That is heavily influenced by the level of commodity prices,
which have been well above historic averages for a long time and
we think that's something that's going to continue for some time
because of the growth in emerging markets."
ON CANADA AS A SAFE HAVEN, PORTFOLIO FLOWS:
"In a very volatile world, very uncertain world, Canada is a
viewed as a so-called safe haven. So we have flows into this
country, not just a foreign direct investment -- takeovers, but
portfolio flows. Capital is looking to come into Canada because
of our strengths. And our challenge for those two elements is
how to use them to our greatest advantage."