Bank of Canada's Carney says eyes three factors as rate hike guide

Sun Apr 21, 2013 11:14am EDT
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* Carney not explicit on how long rates will stay on hold

* BoC watching for 2 pct growth, cooling debt, inflation pickup

OTTAWA, April 21 (Reuters) - Bank of Canada chief Mark Carney said he is unlikely to raise interest rates until economic growth surpasses 2 percent and inflation quickens, adding that personal debt levels and the housing market will also influence the timing of his next move.

The conditions for hiking rates are implied in the bank's mandate to target 2 percent inflation, but Carney laid them out more bluntly than he has in the past in an interview with Global National Television that aired on Sunday.

After leaving the bank's key rate unchanged last week but insisting the next move would be up, he said three factors would determine how long the rate would be on hold.

"First, the economy needs to grow above its so-called potential rate of growth. So it needs to grow more than 2 percentage points. Secondly, you need to see a continuation of what is becoming a positive evolution of household debt and aspects of the housing market," he said in the interview, which was taped on Wednesday.

"So we need to see those aspects and also inflation picking up a little bit before we would move," he said.

Carney, who leaves the Canadian central bank in June to take over at the Bank of England in July, was the first central banker in the Group of Seven industrialized nations to tighten monetary policy after the global financial crisis, with three successive hikes in 2010.

He resumed talk of rate increases a year ago but progressively softened his tone after growth unexpectedly stalled.   Continued...