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 EUROPEAN UNION
"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 target."