UPDATE 1-Bank of Canada's Wilkins sees 'smart pick-up' in U.S. growth

Wed Sep 14, 2016 9:37am EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

(Recasts with Wilkins' comments on U.S., Canadian exports, adds Brexit)

By David Milliken

LONDON, Sept 14 (Reuters) - The U.S. economy looks set to accelerate over the rest of the year, a senior Bank of Canada official said on Wednesday, a potentially encouraging sign for Canada just a week after the central bank warned of risks to domestic growth.

The downside risks to inflation that the bank flagged in its recent policy statement were due to question marks around exports, Senior Deputy Governor Carolyn Wilkins said, with weakness in the sector in the second quarter only partly explained by temporarily weaker U.S. business investment.

"Things are aligned for a smart pick-up in the U.S. for the rest of the year and then solid growth after that," Wilkins said.

Stronger U.S. growth is seen as key to reviving the export sector in Canada, whose biggest trading partner is its neighbor to the south.

If the U.S. Federal Reserve decides to raise interest rates, it will be because it sees solid strength in the U.S. economy as well, which is a good thing for Canada, Wilkins said.

The Bank of Canada warned last week that the Canadian economy could be weaker than it had anticipated just two months ago. While the bank is largely expected to hold rates where they are until 2018 after cutting twice last year, a small minority expect it will cut again.

The Bank of Canada had said that while a healthy job market and consumption in the United States should remain supportive of growth there this year, the outlook for business investment had become less certain.   Continued...