UPDATE 2-Bank of Canada's Carney says not surprised by weak data

Thu Nov 8, 2012 3:53pm EST
 
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* Governor sees data in line with central bank forecast

* Carney says rating agency ratings imply government support

* Says banks now safer but more still to be done

By Leila Lemghalef

MONTREAL, Nov 8 (Reuters) - Recent weak economic data in Canada was expected and does not necessarily mean the central bank will change its view that eventual interest rate hikes are needed, Bank of Canada Governor Mark Carney said on Thursday.

Canada recovered more quickly from the global recession than the United States or Europe, prompting the central bank to hint that it may have to raise interest rates.

But the expansion appears to be slowing. The economy shrank in August for the first time in six months, housing starts slowed in September, the job market stalled in October and exports remain sluggish.

"We have a relatively weak forecast for the third quarter - 1 percent - and data is broadly in line with that," Carney told reporters in Montreal after giving a speech there.

"There are some timing issues that drive some of the output in the energy sector, which will shift some growth between the third and the fourth quarter ... But I wouldn't over-interpret recent data and I certainly wouldn't draw any connection to our monetary stance," he said.   Continued...