Bank of Canada's Wilkins says Canada ready for possible economic storm

FILE PHOTO: Bank of Canada Senior Deputy Governor Carolyn Wilkins poses for a photograph following an interview with Reuters in Montebello, Quebec, Canada, February 8, 2018. REUTERS/Chris Wattie

Nov 19 (Reuters) - Canada’s financial system is in a relatively good place to weather any potential storms generated by a weakening global economy and the U.S.-China trade war, a top Bank of Canada official said on Tuesday.

Senior Deputy Governor Carolyn Wilkins said the central bank is not forecasting a recession at home or world-wide, but reiterated the global economy is facing immense challenges that could spill over into Canada.

“In the unlikely event of a storm, Canada’s financial system is resilient and we are in a good position to deal with whatever comes our way,” Wilkins told a business audience in Montreal, adding recent efforts to stabilize domestic household debt and strengthen the resiliency of the country’s banking system have been worthwhile.

Still, she said Canada should remain cautious. “This is not the time to let our guard down. Robust defenses are especially important when difficulties could affect us at home.”

Last month, the Bank of Canada, which has sat firmly on the sidelines for more than a year even as several of its counterparts have eased, held its key overnight interest rate at 1.75% as expected but left the door open to a possible cut over the coming months.

Wilkins said on Tuesday that relatively low interest rate still gives officials room to maneuver, adding the central bank has other options, like extraordinary forward guidance and large-scale asset purchases.

Reporting by Kelsey Johnson; Editing by Dale Smith