Reuters: US Dollar Report: UPDATE 1-Bank of Canada: economy healthier than expected

Reuters: US Dollar Report Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

UPDATE 1-Bank of Canada: economy healthier than expected Apr 2nd 2012, 16:33 Mon Apr 2, 2012 12:33pm EDT * BoC says economy "somewhat stronger" * Rate decisions to reflect stronger profile, restraint * Household spending trend "unsustainable" * New export strategy needed to boost growth WATERLOO, Ontario, April 2 (Reuters) - Canada's economy is doing better than expected and the threat from the European debt crisis has lessened, Bank of Canada Governor Mark Carney said on Monday while warning that high household debt levels are unsustainable. "Conditions in the Canadian economy have...been somewhat stronger and the degree of slack somewhat smaller than the bank had expected," the central bank chief said in a speech to a business audience in Kitchener-Waterloo, Ontario. He said the bank's monetary policy decisions would take into account the stronger growth profile, firmer-than-expected inflation, fiscal restraint recently announced by federal and provincial governments as well as households' dependence on debt financing, which he continues to see as the biggest domestic risk to the economy. "As always, this analysis will inform our monetary policy decisions," Carney said. "The bank will take whatever action is appropriate to achieve the 2 percent CPI inflation target over the medium term." The bank's next interest rate decision will be announced on April 17. The bank is widely expected to keep its key rate on hold at 1.0 percent until well into 2013. The Canadian dollar was little changed after Carney spoke. But the overnight index swap market, which trades based on expectations for the central bank's key policy rate, showed that traders very slightly increased bets on a rate hike in late 2012 after the speech was published. Carney expressed concern that Canadian household spending relies heavily on low borrowing rates and the high value of homes, resulting in an increased debt load. He said much of the money used to finance recent increases in household debt has come from abroad. "These trends are unsustainable over the medium term," he said. Carney's speech focused on the need to rethink the country's export strategy in light of chronically weak growth expectations for its main market, the United States, and the limitations of relying on domestic spending to fuel economic growth. He said businesses should not rely on the Canadian dollar depreciating in value against the U.S. currency to make exports more competitive. The strong currency is only one challenge for exporters though, he said, with the more important challenge being the reliance on slow-growing economies such as the United States and other advanced countries rather than fast-growing markets in Asia and other emerging economies. Carney's push for new trade strategies is shared by the federal government, which is interested in selling oil to China. In its annual budget last week the government promised to deepen trade ties within the Asia Pacific region and others. Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions