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OTTAWA (Reuters) - Bank of Canada Governor Mark Carney expects high levels of household debt to subside to more manageable levels, but said people need to remain vigilant.
"The time to give a warning is when you can still do something about it, and on the household debt side we have been concerned about the trend," Carney told the Canadian Broadcasting Corporation in an interview taped December 15 and broadcast on Wednesday.
"Our expectation is that the pace of household borrowing is going to slow to something more manageable and that consumption is going to grow more in line with income ... that situation is manageable but we have to collectively keep on top of it."
Carney said that he raised the bank's key interest rate three times between June and September to 1 percent because Canada's economy performed well relative to other advanced economies, and its labor market performed "exceptionally well."
The main risk to the Canadian economy in the coming year is the potential for continued weakness in the U.S. recovery, although Carney said there was unlikely to be a double-dip recession in the United States.
The European debt crisis could also directly impact Canadian growth through the financial sector he said. Canada's federal and provincial government debt levels are in good shape by global standards, he said.
Reporting by Louise Egan; editing by Jeffrey Hodgson