OTTAWA (Reuters) - Canada's central bank is particularly "vigilant" in monitoring the effects of currency moves on inflation in times of great volatility, Bank of Canada Governor Mark Carney said on Wednesday.
"We look to understand the reasons behind its movements, their impact on the underlying economy, also then the impact more directly and mechanically through to the CPI (consumer price index), and we adjust monetary policy appropriately," Carney told Canadian senators on the Senate Committee on National Finance.
"Obviously in times of great change or great volatility we have to be even more vigilant in terms of that analysis," he said.
Carney said the bank's analysis led it estimate that a 10 percent rise in the value of the Canadian dollar would be expected to lower the level of total consumer price index by 0.4 percent.
Reporting by Louise Egan; Editing by Jeffrey Hodgson