U.S. Fed rate increase talk is positive for U.S., Canada: minister

Fri May 20, 2016 8:23am EDT
 
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By Megumi Lim

SENDAI, Japan (Reuters) - Recent comments from U.S. Federal Reserve officials that interest rates are likely to rise are welcome because that suggests the U.S. economy is improving, Canadian finance minister Bill Morneau said on Friday.

A healthy U.S. economy is sure to benefit Canada because of the close trading relationship between the neighbors, Morneau told Reuters in an interview at a Group of Seven (G7) finance meeting in Sendai, in Japan.

Canada is clearly worried about turmoil that could ensue if Britain were to leave the European Union but had not discussed specific steps it could take if Britain voted to leave the bloc next month, Morneau said.

Morneau spoke after the first day of a two-day meeting of top G7 finance officials.

There is concern they will fail to come up with a coordinated response, that some policymakers have called for, to a phase of slow growth and disinflation in the global economy.

"The United States is our largest trading partner by a very significant margin, so the idea that they are considering their interest rates is something that can only say that their economy is doing well," Morneau said.

In recent days, Fed officials have sent a consistent message that interest rate increases are coming soon, which means a rate rise at the next policy meeting in June is a firm possibility.

Given uncertainty about Britain's June 23 referendum on European Union membership, some economists have warned that a Fed rate increase could trigger financial market turmoil.   Continued...

 
Canada's Finance Minister Bill Morneau speaks at a Reuters Newsmaker event at Canada House in London, Britain, April 1, 2016. REUTERS/Toby Melville