* Carney omits previous language on possible rate hikes
* Carney raises possibility of acting against personal debt
By Jennifer Kwan
NANAIMO, British Columbia, Oct 15 (Reuters) - Bank of Canada Governor Mark Carney said on Monday the central bank would do whatever is necessary to stick to its 2 percent inflation target in the face of extreme global uncertainty but made no mention of possible interest rate hikes.
Since April Carney - alone among his Group of Seven peers - has regularly talked about the possible need to raise rates from near-record lows as the economy recovers, even as data showed Canada was being hurt by challenges in Europe and the United States.
“The Bank will take whatever action is appropriate to achieve the 2 percent CPI (consumer price index) inflation target over the medium term,” Carney said in the second speech in a row he has made without talking about eventual rate hikes.
As recently as Oct. 4, senior deputy governor Tiff Macklem repeated the Bank’s line that some withdrawal of the “considerable monetary policy stimulus” might become appropriate.
Despite sounding more dovish about the economic outlook, Carney also highlighted the bank’s possible role in leaning against asset bubbles, the strongest suggestion yet that he may be considering action aimed directly at curbing household debt.
“While we obviously cannot determine events over which we have no control, we can be transparent about what we expect and how we would react to different scenarios,” he said.
“That includes being clear about the role of monetary policy in supporting financial stability in Canada. For example, if we were to lean against emerging imbalances in household debt, we would clearly declare we are doing so and indicate how long we expect it would take for inflation to return to the 2 percent target,” he added.
Revised data on Monday showed the household debt-to-income ratio was far higher than previously thought. Carney has called the debt burden the biggest domestic risk to financial stability in Canada. [I D:nL1E8LFC62]
Since the global financial crisis, he has emphasized that the bank’s mandate allows it to use monetary policy to prevent bubbles even if it means inflation takes longer than usual to return to the target.
Analysts surveyed by Reuters unanimously expect the central bank to hold its overnight lending target unchanged at 1.0 percent on Oct. 23, and predicted it would resume hiking rates in the second half of next year.
Carney said there was some evidence global uncertainty was hitting the Canadian economy. The Bank’s quarterly monetary policy report, due out on Oct. 24, would take into account this uncertainty, he added.
The bank uses the report to revise its domestic and global economic projections.