Sept 20 Bank of Canada Governor Mark Carney
expects the Canadian economy to grow through the rest of this
year and signaled on Tuesday he stands ready to use a variety
of tools and policy options to ensure stability.
Following are key quotes from Carney following his speech
in New Brunswick:
CARNEY ON G20 DISCUSSIONS
"The issue is about the pace of deficit reduction as
opposed to the size of increased stimulus. There is one
economy, the United States, where obviously there is a very
large stimulus package on the table that the president put
forward, and U.S. politics will determine how much of that is
actually enacted. The discussions at G20 will have no bearing
on what actually happens in that situation."
"For the rest, we think that the broad path of fiscal
consolidation that was agreed last year in Toronto, which is to
halve deficits by 2013 relative to the level then, and then to
stabilize debt ... once you accept that we're talking about
very marginal adjustments and it's more about the effectiveness
of fiscal policies."
"I think the discussions are going to be much more around
the European situation. It's going to be about rebalancing
global demand, which is not a deficit question in advanced
economies. It'll be around some of the key financial reforms."
ON IMF DOWNGRADE TO CANADIAN GROWTH FORECASTS
"I don't think anyone should be surprised by the direction
of the adjustment, given events globally, we have directionally
said the same thing. The Bank of Canada adjusts forecasts four
times a year; our next adjustment will be October 25. That's
when we'll put a fine point on where we expect growth in Canada
and the U.S., and globally, to go."
ON CANADIAN BUSINESS STRATEGY AMID CRISES:
"The basic point we're trying to get across is it doesn't
matter in terms of the bigger decisions that Canadian
businesses and businesses here in New Brunswick make, because
those big issues are that we are underrepresented in the vast
majority of emerging markets, we are not as productive as we
need to be, and big picture, commodity prices are going to be
relatively high for a longer period of time. And the next
important point is that Canadians can rely on the Bank to keep
price stability and the Bank will do its part to ensure that
the financial system continues to function. So one can be
incapacitated by events abroad ... and track all the
machinations, or look at the medium to long-term and take
advantage of the strengths we have."
ON NEED FOR FISCAL CONSOLIDATION
"It's very important for all countries, all major
economies, Canada's included, to maintain the path that was set
out in the Toronto G20 last year, and to have fiscal policy
consistent with that path."
ON POSSIBLE REPEAT OF 2008 FINANCIAL CRISIS
"One of the things that's important is that some of the
facilities that have been put in place in Europe, particularity
the liquidity facilities of the European Central Bank, make
that type of scenario very unlikely."
ON CANADIAN HOUSEHOLD DEBT LEVELS
"We're concerned about it, without question we're
"We've expected that the rate of growth of household debt
will slow. We've been saying that for nine months. And it has
started to slow progressively. That is good. And our forecast
is that we expect that consumption going forward will be much
more in line with the growth of income, so that this ration
will .. start to peak and then move down."
ON EUROPE'S HANDLING OF DEBT CRISIS
"They have more than sufficient resources ... in the
European monetary union countries to address the situation in
the peripheral economies and even some of the core countries
that are being put under strain,"
"In many respects to look to the external sources of
capital, whether it's from a major reserve holder like China or
from the IMF or other pools of capital ... is a question of
political will to take the decision to deploy the resources
that they have to address it."
ON ROLE OF US$ AND YUAN AS RESERVE CURRENCIES
"The overwhelming choice of the market is that the U.S.
dollar is the reserve currency. In the longer sweep of history
... one can see a time where the Chinese currency could also be
a reserve currency, but a variety of things have to happen
before that is the case, most importantly convertibility."
(Reporting by Louise Egan in Ottawa and Trish Nixon, Andrea
Hopkins and Julie Gordon in Toronto; Editing by Jeffrey Hodgson
and Peter Galloway)