Canada's Flaherty says serious recession persists

Mon Apr 20, 2009 1:45pm EDT
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By Ros Krasny

CHICAGO (Reuters) - Canadian Finance Minister James Flaherty said on Monday he is seeing "some small encouraging signs" for the country's economy, but that Canada remains in a "serious recession."

"We will continue to have serious challenges; this is a difficult year," Flaherty said on the sidelines of a Chicago Federal Reserve Bank conference on financial literacy.

Among the positives, the Canadian bond market is "functioning well again and there are some encouraging signs in capital markets," he said.

Asked about the possibility that more measures to boost Canada's economy will be needed, Flaherty said that stimulus already in place "is just entering the economy now."

"The fiscal year started April 1 and the major investments are happening in the first quarter -- April, May, June. We need to make those investments and see where we stand," he said.

The Bank of Canada is due to meet this week about possible additional measures it can take to stimulate the country's economy beyond rate cuts.

Like the U.S. Fed, the BOC has cut interest rates drastically -- in Canada's case to 0.5 percent -- in an attempt to pull the country out of recession.

Many market participants expect some form of quantitative easing to be attempted in Canada by the end of the second quarter now that rates are at rock-bottom.   Continued...

<p>Canadian Finance Minister Jim Flaherty speaks at a news conference following the G20 Finance Ministers meeting at a hotel, near Horsham, in southern England March 14,2009. REUTERS/Kevin Coombs (</p>