Reuters Business Report - Bank of Canada Governor Mark Carney- who takes over the reigns of the Bank of England on July 1st - says the U.S. economy is getting better.
He spoke with Reuters's Chrystia Freeland at the National Press Club in Washington DC.
"The quality of private sector growth in the United States has picked up. And so even though 2013 is not going to be a spectacular year for the U.S. economy, because we see at least almost 1.75 percentage points of fiscal drag against that, there is a continued recovery on the private side, which is important. It's important for Canada. Now the third- so the U.S. is moving towards that class of advanced economies that have well functioning financial systems, where private credit is growing and where there is reasonably solid investment growth."
Carney believes the Federal Reserve's unconventional monetary policies and transparency will be worth the risks:
"Tremendous confidence in the Fed. Obviously and this is a risk we want to see tested. The - this is a good dynamic in the global economy if the underlying fundamentals are driving the potential exit. I think the value of the Fed's stated contingent guidance helps a lot with this. It helps market participants understand- not exactly the timing of an adjustment in interest rates, but the minimum conditions before the Fed even things about adjustment in interest rates. And I think as well that the ability to sequence by adjusting interest rates first before there is any prospect of reducing balance sheet is the right one. So look this is a good thing as when it comes to that point. But don't take anything I say as a prediction of exactly when that would happen. We will leave that to the Fed."
He also addressed the issue of fiscal austerity:
"If we want to talk about ultimate sources of growth, you know, fiscal policy, sustainable fiscal policy is a necessary condition, price stability, financial stability, necessary conditions. Sustainable growth comes from the private sector, not from the IMF, the Bank of Canada or anywhere else."