* Carney omits previous language on possible rate hikes
* Sees moderation in housing market as measures take effect
* Oct 24 update to reflect impact of global uncertainty
By Jennifer Kwan
NANAIMO, British Columbia, Oct 15 The Bank of
Canada will take whatever action is necessary to keep inflation
on target, and its economic forecasts next week will reflect the
fallout from extreme global uncertainty, central bank chief Mark
Carney said on Monday.
Carney also said there were some signs the country's once
hot housing market was easing, but warned that the data could be
volatile as the effect of fiscal and regulatory changes designed
to curb the mortgage market took effect.
Since April, Carney - alone among his Group of Seven peers -
has regularly talked about the possible need to raise interest
rates from near-record lows as the economy recovers, even as
data showed Canada was being hurt by challenges in Europe and
the United States.
His speech on Monday omitted the hawkish language, although
it was not clear Carney was abandoning the monetary tightening
"The bank will take whatever action is appropriate to
achieve the 2 percent CPI (consumer price index) inflation
target over the medium term," Carney said.
As recently as Oct. 4, senior deputy governor Tiff Macklem
repeated the bank's line that some withdrawal of the
"considerable monetary policy stimulus" might become
Carney also highlighted the bank's possible role in leaning
against asset bubbles, naming Canada's high household debt as an
example. This suggests a willingness to hike rates if the debt
were deemed beyond the scope of fiscal and regulatory measures.
Carney later said in a press conference that he was naming
an example of the various ways the bank could act.
"The point was a hypothetical one to ensure that people
properly understand our overall monetary policy framework," he
said. "Action has been taken. We've always said that monetary
policy is the last line of defense."
Peter Buchanan, economist at CIBC World Markets, said the
comments showed Carney was "not yet prepared to get off the
fence and attack the problem by raising rates, given low
inflation and potential risks to the recovery."
Soaring personal debt has been a top concern of Carney, and
data on Monday showed the ratio of household debt to income
continues to rise.
The debt problem has been partly fueled by people taking
advantage of ultra-low mortgage rates and rising home prices.
Those pressures may be easing, Carney said.
"We're seeing some signs of that and there is some
desirability obviously ... to an easing there, but we continue
to watch the situation along with others very closely," he said.
Analysts surveyed by Reuters unanimously expect the central
bank to hold its overnight lending target unchanged at 1.0
percent on Oct. 23, and predicted it would resume hiking rates
in the second half of next year.
The bank's quarterly monetary policy report is due out on
Oct. 24 and will revise the bank's domestic and global economic