Mark Carney's juggling act

Mark Carney's juggling act - Mark Carney’s juggling act...

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Unformatted text preview: Mark Carney’s juggling act Mark Carney is juggling a better economic outlook with a strong dollar, slow productivity gains and an uneasy global recovery. These factors stopped the Bank of Canada Governor from raising interest rates Tuesday even as he cited a slightly improved forecast for economic growth this year and next. Europe’s debt and bank troubles also mean “significant” uncertainty for the world economy. Holding the central bank’s benchmark overnight rate at 1 per cent, Mr. Carney and his rate-setting panel also drew attention to Canada’s current account deficit, which has swelled to the widest in two decades. A deficit in the flow of trade and foreign investment can provide an early warning of a country taking on too much debt, while a surplus can show it doing little to stimulate domestic demand. The central bank believes recent moves to shore up the U.S. economy will boost demand south of the border and, in turn, benefit Canada. But the wording of Tuesday’s decision suggests Mr. Carney is worried that the “cumulative effects’’ of the currency and Canadian companies’ tepid progress in improving their productivity mean the country isn’t yet positioned to get everything it can...
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