Carney backs inflation targeting as best for UK, Canada

Tue Feb 12, 2013 12:44pm EST
 

OTTAWA (Reuters) - Mark Carney, the governor of the Bank of Canada who will switch jobs to take the helm of the Bank of England in July, said on Monday that inflation targeting is still the best approach for central banks in both the UK and Canada.

In remarks to Canadian legislators, Carney emphasized what he told a British members of Parliament last week when he cooled expectations that he would push for sweeping changes in British monetary policy.

Carney, who was asked by Canadian opposition legislator Guy Caron for his views on targeting nominal GDP - a mix of growth and inflation - rather than inflation only, did recommend a periodic review of that mandate with the option of changing it.

Carney, in a speech in December, had mentioned nominal GDP-targeting in as an extreme measure in economies where central banks have run out of more conventional tools to boost their economies, leading some to speculate he would push for it at the Bank of England.

"It is still the position of the Bank of Canada that a flexible inflation targeting framework is the best in the world," Carney said on Tuesday.

"I share (the idea of) flexible inflation targeting here and, as I said last week, in the United Kingdom as well," he added.

The 47-year old former Goldman Sachs banker will leave the Bank of Canada on June 1 and take his new job in London one month later.

He stressed that Canada and the UK had little in common in terms of economic challenges.

"We don't have large public and private indebtedness, we are not at zero lower bound (interest rates), we don't have the problems in the financial sector that exist over there," he said.   Continued...

 
Mark Carney, Bank of Canada Governor and chairman of the Financial Stability Board speaks during a news conference after a Financial Stability Board plenary meeting in Zurich, January 28, 2013. REUTERS/Michael Buholzer