Jan 23 Below are key quotes from an appearance
by Bank of Canada Governor Mark Carney and Senior Deputy
Governor Tiff Macklem:
CARNEY ON POSSIBILITY OF A GLOBAL CURRENCY WAR
"It does not exist yet and we hope there won't be such a
currency war ... there are no interventions ... for the Group of
Seven nations there is that risk but this war does not exist
yet. We have options, like all the central banks, but the Bank
of Canada will be guided by the flexible inflation targeting
framework that exists here."
CARNEY ON THE HIGH LEVEL OF CANADIAN HOUSEHOLD DEBT
"We are keeping our guard up ... at this moment there are
encouraging signs as regards imbalances in the household sector,
that is clear. But the level of household debt remains a worry.
But the first part of tackling the situation is stabilizing the
debt load ... The situation in Canada right now is a bit
different compared to the situation that existed in the United
States before the crisis. There is a big difference between the
two because the quality of the lenders here in Canada are much
higher than in the United States and the ratio of the debt is
much lower here."
CARNEY ON BANK OF ENGLAND POLICY AND COOPERATION:
"I think the (Monetary Policy Committee) of the Bank of
England has done an admirable job under extremely difficult
circumstances and I would stand four-square behind them."
"During the toughest times in the crisis we cooperated very
closely and effectively with the Bank of England and other
partners in the G7 and broader G20. But with that core, with the
Bank of England ... their analysis and leadership was a very
important element in addressing the worst of the crisis."
CARNEY ON WESTERN CANADIAN CRUDE:
"So why do we come back in 2013, 2014? ... we expect that
the discount on Western Canadian crude, it doesn't fully go
away, but it starts to narrow."
CARNEY ON WHETHER BOE GOVERNOR IS TOO POWERFUL:
"I would make the distinction between the responsibilities
of the institution, and the power of any individual within that
institution. And part of my responsibility when I am there is
that as the Bank of England gets additional responsibilities on
the micro- and macro prudential side, is to ensure that the
committee structure, the new governance structure, the other
aspects, work to their full effect: to ensure that the
institution is discharging its responsibilities in the right
way, it's not relying on a single individual - it won't be -,
and that accountability is clear and transparent."
CARNEY ON BANK OF ENGLAND ROLE IN EVENT BRITAIN LEAVES
"I'll leave such weighty decisions to Her Majesty's
government and ultimately, as Prime Minister Cameron indicated
today, ultimately to the British people. The responsibility of
the Bank of England will be to manage to the mandates that have
been given to the Bank of England. And they are, like in Canada,
price stability as judged by an inflation target. It's also a
responsibility to contribute importantly to financial stability
in the UK."
CARNEY ON MOVES TO COOL CANADIAN HOUSING MARKET
"What we've seen obviously is four tightenings of mortgage
insurance rules by the government. We think those have been done
at the right time and they've been prudent. They're having an
impact. We've seen tightening of underwriting standards for
banks by OSFI (Office of the Superintendent of Financial
Institutions) in the summer and it has had ... some influence on
the stance of monetary policy on the balance."
"You've seen some of the influence today, which is as it
improves, as there are some constructive signs, some encouraging
signs in the household sector, the immediacy of the potential
supportive role of monetary policy in this respect is reduced."
CARNEY ON ADDRESSING FINANCIAL IMBALANCES:
"What I said I in a speech in December ... was to make as
clear as we can, and I'll try to make it very clear, that if the
bank were to take action, so if the bank were to adjust the
policy rate for reasons that related to financial stability, we
would be very clear that that is why we're doing it."
CARNEY ON RATE-TIGHTENING BIAS:
"Over the projection horizon, the expectation is that some
modest withdrawal of monetary stimulus may be required. So the
direction is clear, the timing has shifted. The timing of that
expectation has shifted for the reasons that ... the bank's
governing council has stated, which is that the inflation
outlook is more muted, excess capacity in the economy has gone
up and importantly, we are seeing a constructive evolution of
imbalances in the household sector. So all those factors
together push back the need for any potential adjustment, any
potential tightening, but that is still the ultimate direction."
"I'm not going to categorically rule out anything (regarding
a possible rate cut) ... at a point in the future if there is a
different evolution of the forces that affect growth and
inflation in Canada ... we'll adjust monetary policy, including
guidance, as appropriate, in order to meet our inflation