By Allan Dowd
VANCOUVER, Oct 8 (Reuters) - The Bank of Canada repeated on Thursday its concern about the strength of its currency, warning that it could delay the return of inflation to the bank's 2 percent target.
'All else being equal, a persistently strong Canadian dollar would also reduce real growth and delay the return of inflation to target,' Senior Deputy Governor Paul Jenkins said in the prepared text of a speech in Vancouver.
He renewed the central bank's stance that though its rock-bottom target interest rate cannot be cut further, it could take other measures such as quantitative easing, effectively printing money, to curb the currency.
'Even though we are at the effective lower bound for our policy rate, the bank retains considerable flexibility in the conduct of monetary policy,' he said.
The Canadian dollar is substantially higher than the level the central bank had assumed in its July Monetary Policy Report, and officials have repeatedly expressed their concern about the currency's strength.
Many market players doubt the bank will intervene to weaken the currency. Still, the Canadian dollar weakened slightly after his remarks were published to as low as C$1.0539 to the U.S. dollar, or 94.89 U.S. cents, from C$1.0515, or 95.10 U.S. cents, just before.
Jenkins repeated the bank's conditional pledge to keep interest rates steady through the middle of 2010 and its expectation that inflation will return to 2 percent target in the second quarter of 2011.
He said the stronger-than-expected growth it sees in the second half of this year partly reflected temporary factors such as the U.S. cash-for-clunkers automobile program.
(Writing by Randall Palmer and David Ljunggren; editing by Jeffrey Hodgson) Keywords: CANADA ECONOMY/JENKINS (randall.palmer@thomsonreuters.com; +1-613-235-6745; Reuters Messaging: randall.palmer.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
VANCOUVER, Oct 8 (Reuters) - The Bank of Canada repeated on Thursday its concern about the strength of its currency, warning that it could delay the return of inflation to the bank's 2 percent target.
'All else being equal, a persistently strong Canadian dollar would also reduce real growth and delay the return of inflation to target,' Senior Deputy Governor Paul Jenkins said in the prepared text of a speech in Vancouver.
He renewed the central bank's stance that though its rock-bottom target interest rate cannot be cut further, it could take other measures such as quantitative easing, effectively printing money, to curb the currency.
'Even though we are at the effective lower bound for our policy rate, the bank retains considerable flexibility in the conduct of monetary policy,' he said.
The Canadian dollar is substantially higher than the level the central bank had assumed in its July Monetary Policy Report, and officials have repeatedly expressed their concern about the currency's strength.
Many market players doubt the bank will intervene to weaken the currency. Still, the Canadian dollar weakened slightly after his remarks were published to as low as C$1.0539 to the U.S. dollar, or 94.89 U.S. cents, from C$1.0515, or 95.10 U.S. cents, just before.
Jenkins repeated the bank's conditional pledge to keep interest rates steady through the middle of 2010 and its expectation that inflation will return to 2 percent target in the second quarter of 2011.
He said the stronger-than-expected growth it sees in the second half of this year partly reflected temporary factors such as the U.S. cash-for-clunkers automobile program.
(Writing by Randall Palmer and David Ljunggren; editing by Jeffrey Hodgson) Keywords: CANADA ECONOMY/JENKINS (randall.palmer@thomsonreuters.com; +1-613-235-6745; Reuters Messaging: randall.palmer.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
© 2009 AFX News
