Bank of Canada's Carney still leaning towards rate hike

By Louise Egan

OTTAWA (Reuters) - Bank of Canada Governor Mark Carney argued the case for raising interest rates in an interview with the BBC in London on Wednesday, even though he said a global slowdown was having an impact on his country's economy.

The central bank chief has been swimming against the global current since April with his message that borrowing costs will soon have to rise in Canada. Policy makers in most other major economies are looking for ways to stimulate their economies further amid the European debt crisis, and disappointing growth in the United States and China.

"We're in a very different place than the major crisis economies, such as the U.K.," Carney said, according to a transcript of the interview.

"Our economy's almost back at full capacity, the labor market's been growing, we're growing above -- we had been growing above trend, and the extent to which we continue to grow above trend, we may withdraw some of that monetary policy stimulus."

In remarks that were similar to those he made last month in defense of his hawkish stance, he said the current benchmark interest rate of 1.0 percent was "very low".

"But we have a financial system that's firing on all cylinders and so we will have to adjust -- we will adjust if it's appropriate," he said.

In a new twist, Carney also said the Bank of Canada could act to help cool the red-hot housing market if needed.

In a separate interview with CTV on Wednesday, he suggested months of dire warnings that Canadians were piling on too much debt was starting to pay off. The pace of growth in household debt is slowing and the housing market is cooling.