Saturday August 20, 2011

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Saturday August 20, 2011

Flaherty, Carney take cautious tone on economy

Bank of Canada governor Mark Carney told MPs on Friday that the turmoil working its way through financial markets will bring uncertainty, but the bank is ready to deal with any problems.

Carney was speaking to the Commons finance committee, which had asked him and Finance Minister Jim Flaherty to share their views on the outlook for Canada’s economy.

Carney took a cautious tone in his remarks, explaining that while there are many threats to growth, the central bank is monitoring developments closely and has not made any major changes to its outlook recently.

“The considerable headwinds are now blowing hard,” Carney said. “[But] the bank has a wide range of tools and policy options it will continue to employ [to deal with the crisis].”

Carney renewed his call for productivity improvements, noting that U.S. firms have invested heavily in becoming more productive while credit is comparatively cheap.

“Their actual investment in machinery and equipment is well above what’s happened in Canada,” he said.

He also said the Canadian dollar’s strength is compounding the current crisis for Canadian firms.

Inflation data released earlier Friday morning — which showed that Canada’s consumer price index fell to 2.7 per cent last month — is well within the parameters the central bank expected in its last monetary policy report, Carney said.  (Source: CBC News)