WASHINGTON, April 18 The following are comments
from Bank of Canada Governor Mark Carney, speaking on the global
economy and financial reform at a Thomson Reuters Newsmaker
event on Thursday in Washington. Carney is scheduled to become
governor of the Bank of England on July 1.
Carney is in Washington this week for Group of 20 meetings
and the spring meetings of the International Monetary Fund and
ON THE FED'S GUIDANCE:
"It helps market participants understand not exactly the
timing of adjustment of interest rates but the minimum
conditions before the Fed even thinks about adjustment of
ON EXIT FROM UNCONVENTIONAL MONETARY POLICY:
"The tools are there. It hasn't been done before so I think
there's a need for humility around it and an appropriate caution
"It can also, as appropriate, influence the continued path
of unconventional policy. If there is a prospect of an exit, if
the timing of the exit becomes more clear, it obviously
influences the path, magnitude and composition of unconventional
policy. At least those are considerations that need to be taken
into account by relevant central banks."
CANADIAN HOUSING MARKET:
"We see valuations in the housing market as being quite firm
and very firm in some markets. We are seeing an adjustment in
those prices and we are now seeing household debt levels
stabilize, albeit at high levels. But things are moving in the
right direction, including on the new build side, on the housing
GROWTH IN HOUSING DEBT IN CANADA:
"We have conducted monetary policy in, we think, a pretty
transparent way that has highlighted the risks to this, and the
potential consequences for the path of interest rates. In other
words, they could be higher sooner if this isn't addressed or
this isn't adjusted in a more timely way."
"The important development, in our opinion from the course
of last 12 months or so, is that the quality of private-sector
growth in the United States has picked up ...
"The U.S. is moving towards that class of advanced economies
that has well-functioning financial systems, private credit is
growing now and where there is reasonably solvent investment
"We do think the U.S. economy, the underlying private side,
has sustainable momentum. There's talk about the fiscal noise
but there is sustainable momentum. That has an implication for
"Solid growth there, the fact that there is a lot of cash
... on Canadian balance sheets, the financial system is wide
open and there is real opportunity to enhance productivity
building in markets etc, all of that we think is going to kick
in to having some of that money put to work."
ON REINHART, ROGOFF RESEARCH:
"I haven't audited the now famous spreadsheet but others
have, apparently. I think what's important is to recognize that
the depths of the insights by Reinhart and Rogoff's work, which
capture a number of dynamics that have come to pass for
countries coming out of major crisis. In our analysis and
forecasting in what would happen in the U.S., what would happen
to the euro zone and other places, we did rely and use their
work as a sanity check on our forecast. The element that wasn't
relevant, at least in our view, was exactly the issue that
people are focused on, which is this 90 percent to GDP
component; it's more the time it takes to repair private balance
HOW MUCH DEBT IS TOO MUCH:
"Obviously there's a limit, I won't get pinned down on the
"One of the things that we are due to be discussing ... at
the G20 this weekend is what are the long-term fiscal anchors."
"I would say that from a Canadian perspective, given our
overall fiscal situation, we feel pretty comfortable that we are
on the right path to a sustainable situation."
WAS CYPRUS A GOOD PRECEDENT?
"Bail-in broadly speaking, not bail-in as it was performed a
couple of weeks ago in Cyprus, but bail-in as a component of
addressing systemic risk ... is an absolutely necessary element,
it doesn't solve everything but it's absolutely necessary."
"If we want to talk about ultimate sources of growth,
sustainable fiscal policy is a necessary condition ...
Sustainable growth comes from the private sector, not from the
IMF, Bank of Canada or anyone else."
"Central bankers take fiscal policy as given. Treasuries
take monetary policy as given. That's the separation and I'm not
going to wade in positively, negatively, neutrally."