Bank of Canada sees growth
By Frank McGurty
SAINT JOHN, New Brunswick (Reuters) - Canadian economic growth will resume this year and the European debt crisis is "fixable" with existing resources, Bank of Canada Governor Mark Carney said on Tuesday.
In an apparent bid to counter growing fears of another recession in Canada, Carney also said he does not expect a U.S. recession, although the risk of one has "clearly risen". He pledged to act to protect the Canadian recovery if needed, although he did not signal an intention to cut interest rates.
"For its part, the Bank of Canada has a wide range of tools and policy options that it will continue to deploy as appropriate," Carney said in the prepared text of his speech.
Those tools include emergency liquidity operations for banks in case of a massive external shock, he said.
Speaking as markets focus on the debt-stressed euro zone and efforts to prevent Greece from defaulting, Canada's top banker said the country is more threatened by its neighbor and top trade partner, the United States, where the economy is "close to stall speed".
Carney estimated U.S. economic growth of about 2 percent through mid-2012, compared with the bank's July forecast of around 3.25 percent in the second half of this year and in 2012-13.
His comments otherwise appeared largely the same as in the bank's last rate statement and in Carney's testimony to Parliament in mid-August.
"I don't think we are quite at the stage where they need to contemplate (interest-rate) cuts but the bank will be very flexible and see how the situation evolves to respond appropriately," said David Tulk, chief Canada macro strategist at TD Securities. Continued...