Sept 20 (Reuters) - 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 concerned."
"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)