Interest rate increases by the Bank of Canada aren’t imminent, though will probably still take place in the future, Governor Mark Carney said.
“Over time, rates are likely to increase somewhat, but over time, so a less imminent timing relative to our expectation,” Carney said in an interview published today in the National Post newspaper. “Certainly, that timetable and that expectation is the function of a variety of global and domestic factors.”
The Bank of Canada kept its benchmark overnight rate where it’s been for more than two years, at 1 percent, on Oct. 23, in part because Canada’s economy has been restrained by weak global demand. The bank cited “lower than expected” core inflation in its Monetary Policy Report.
The central bank could alter its end-of-2014 target for achieving its goal of 2 percent inflation in Canada and use monetary policy to address “financial vulnerabilities,” Carney said. “The most prominent one, obviously in Canada, is household debt.”
The nation’s consumer price index, a cost of living indicator used by the central bank, rose 1.2 percent in September from a year ago, Statistics Canada said on Oct. 19.
About 20 percent of recent consumption has been financed through debt, Carney told a Senate banking committee in Ottawa on Oct. 31.
The central bank is monitoring the effect of measures by the Canadian government and national regulators to limit mortgage lending, Carney was quoted as saying, in the interview.
The Bank of Canada will probably raise its overnight rate to 1.25 percent in the third quarter of 2013, according to the median of 23 forecasts from economists surveyed by Bloomberg.