By TraderVox.com
Tradervox.com (Dublin) – Mark Carney, the Bank of Canada Governor, indicated that the country is in a very different situation compared to other economies such as the UK. He said this when talking about increasing the borrowing cost in Canada during an interview with the BBC in London. He noted that the country’s economy has been growing above trend and the monetary stimulus policy it has adopted to spur growth may be removed. Noting that the global economy is in a very dangerous state, Carney indicated that the country’s financial system is working well from all corners and there might be need to adjust the monetary policy.
Carney’s talk about increasing the interest rate sets the nation apart from the rest of the developed nations which are lowering interest rates or keeping them at record low to spur growth. Such central banks as the European Central Bank, US Federal Reserve, and People’s Bank of China are encouraging low interest rates to spur growth in their respective economies. In his interview with the BBC, Carney noted that the global economic slowdown have had a knock-on effect on the Canadian economy as it has driven commodity prices lower. Commodity prices remain at 20 percent above historical averages. He noted that Canadian economy is one of the net beneficiaries of these high commodity prices.
When asked about whether the household debt levels pose a risk to the banking system, Carney said that there is no risk of banking crisis in Canada as mortgages are insured by the government. The Canadian currency increased by 0.25 percent against the dollar to exchange at 99.18 Canadian Cents at the start of trading in Toronto.
Carney exuded confidence in Canadian housing market saying in an interview with CTV that the household debt is slowing down as a result of measures taken by the federal government and the financial institution regulator. He also pointed out that policy makers are ready to act is stop further increases in debt if need be.
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