Recession ends in Canada, says upbeat central bank

Thu Jul 23, 2009 7:47pm EDT
 
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By Louise Egan

OTTAWA (Reuters) - The Bank of Canada declared Canada's recession to be virtually over on Thursday and raced ahead of a cautious central banker pack with a mostly upbeat view on the world economy.

The worst-case scenario of global financial disaster has been "taken off the table", Governor Mark Carney said after the central bank released a surprisingly rosy quarterly outlook.

Carney predicted a turnaround in Canada's economy this quarter, an earlier-than-expected recovery from the worst recession since the 1990s.

But he warned of a long, drawn-out healing process with continued job losses. The bank stands ready to take further action to stimulate the economy, especially if a stronger dollar threatens to choke growth, he said.

"We're on track for the recovery, both in Canada and globally ... But it's early days. I mean, it's a long road," Carney told reporters.

To keep the momentum going, Carney said the bank must stick to its conditional pledge to keep its benchmark interest rate at a floor of 0.25 percent through June 2010 provided inflation does not threaten to flare out of control.

"We need to be resolute in the implementation of policy. We need to keep policy, in our judgment, stimulative for a period of time," he insisted.

The Bank of Canada has been reluctant to resort to unconventional policies, like printing money.   Continued...

 
<p>A Canadian one dollar coin, also know as a loonie, is shown in Montreal, April 28, 2006. REUTERS/Shaun Best/File</p>