Carney says Europe debt crisis critical for Canada
CBC News
Posted: Oct 26, 2011 11:22 AM ET
Bank of Canada governor Mark Carney said Wednesday the European debt crisis is one of the biggest issues facing Canada's economy.
Carney was commenting on the bank's latest monetary policy report, which was released earlier Wednesday — a day after the bank lowered its forecast for Canadian economic growth.
He said Canada was working "intensely" with its European peers as the region tries to develop a strategy to shore up banks and debt-burdened economies.
Carney said the bank's view is that Europe's debt crisis will be contained.
When challenged during a news conference by a journalist on why the central bank had not lowered rates on Tuesday, Carney said the national economy remains stable.
The report said the global risks to the Canadian economy have increased in the last report since July. It cited more volatility in stock markets, as both banks and consumers decrease debt, increased government spending cuts and falling business and consumer confidence around the world.
The bank on Tuesday, as expected, also kept interest rates super-low at 1.0 per cent. The bank's policy rate has been at 1.0 per cent for over a year.
The bank also said Canada's economy likely grew a modest 2.1 per cent this year — most of it in the first quarter — and will fare even worse at 1.9 per cent next year.
Both numbers were 0.7 percentage points less than the bank had projected in July.
The bank projected that the economy will expand by 2.9 per cent in 2013.
It also predicted the eurozone would fall into a brief recession.