BOC Governor Carney reiterates that a persistently strong CAD could offset positive factors leading to economic recovery in Canada. Recent dollar weakness is partly a normalization of financial markets after the huge flight-to-quality seen a year ago and partly as a result of the rise in commodity prices.
The global recovery seen to date is almost entirely stimulus driven, Carney says. External demand may not be strong enough to spark a domestic recovery; domestic spending is needed, he says.
Carney says real exchange rate adjustments are needed between deficit and surplus countries, including China. From a macro perspective, that last remark is the most important. It is also the furthest off in the future.
