Nov. 17 (Bloomberg) -- Bank of Canada Deputy Governor Jean Boivin said that low interest rates and domestic spending will drive economic growth over the next two years.
“Borrowing costs remain at exceptionally low levels,” Boivin, 39, said in the slides of a presentation he’s giving tonight in Thompson, Manitoba.
The speech, a recap of the central bank’s Oct. 26 quarterly economic forecast, made no reference to the outlook for the central bank’s 1 percent policy interest rate. Policy makers last month removed a reference to the need for rate increases and said output won’t recover until the end of 2013.
Economic growth will slow to 1.9 percent next year from 2.1 percent this year, Boivin said, and accelerate to 2.9 percent in 2013. Domestic demand will be “the primary driver of growth” over next two years, he said.
Boivin also reiterated the central bank’s prediction that the inflation rate will slow to 1 next year and accelerate to 2 percent by late 2013.
Some of the main downside risks to the recovery are the sovereign debt crisis in Europe and slow growth in the U.S., and the chance Canadian household spending will be faster than policy makers forecast, Boivin said.
Before joining the central bank, Boivin was an economist at HEC Montreal and co-wrote papers with U.S. Federal Reserve Chairman Ben S. Bernanke. He was also a research fellow at the National Bureau of Economic Research.
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