2 Min Read
TORONTO (Reuters) - The Bank of Canada could act, as a last resort, if excessive debt levels threaten the domestic economy, Governor Mark Carney was quoted as saying on Friday.
Carney told Canadian Press that a central bank analysis showed that 10 percent of Canadians could be vulnerable if interest rates rose to what he described as "more normal levels."
"In exceptional circumstances, if there are issues that threaten financial stability, such as household debt ... the bank could use monetary policy for that purpose," he said. "That factors into our decision-making without question."
A report on the interview appeared on the website of the Winnipeg Free Press.
Economists do not expect the Bank of Canada to raise interest rates this year, given concerns that higher rates could threaten a still-fragile economic recovery. The bank's main policy rate is at 1 percent, which is well below February's 2.6 percent inflation rate.
But the economy created a stronger than expected 82,000 jobs last month, casting doubt over that forecast.
Canada's household debt has climbed above 150 percent of disposable income, a level that the central bank has described as unsustainable.
"We have never been as indebted as we are today as individuals," Carney told Canadian Press. "We've done analysis which shows that about 10 percent of Canadians are vulnerable if interest rates returned to more normal levels, which will happen."
Reporting by Janet Guttsman; Editing by Padraic Cassidy