(Reuters) - Below are key quotes from an appearance by Bank of Canada Governor Mark Carney and Senior Deputy Governor Tiff Macklem:
"There are a variety of factors that drive our currency. Yes, it's the terms of trade. But it's also our better fiscal position, monetary policy credibility, we're a safe haven, the strength of our banking sector. And it has to be said as well, there has been in recent years an understandable generalized weakness in the U.S. dollar and a diversification of currencies internationally out of the U.S. dollar, out of euro. There are relatively few other places to go."
"...That we focus on the things which we can control, which is the trade agenda, making the country more productive ... In that regard, a strong exchange rate is to our advantage, because we import most of our machinery, equipment and ICT (information and communications technology).
"In only rare occasions do an increase in commodity prices not benefit the Canadian economy ... (the) U.S. is not pricing commodities these days, Asia is pricing commodities if you had to pick a region. Our economy is less oriented to Asia. An increase in commodity prices, to put a rough figure on it, that's driven by the U.S. is about 3 times as positive for Canada as one driven by Asia. But an increase in commodity prices driven by Asia is still materially positive for the Canadian economy, despite the fact it also encourages, all things being equal, a rise in our exchange rate."
"What we can do, and we released a statement, we signed a statement, the minister of finance and I this morning, of the G7, which reaffirmed the commitment of the G7 to ensure that monetary policy is focused on domestic objectives, not on targeting exchange rates. And we hold the members of the G7 to that long-standing position."
"It is extremely important, it's important that we as a G7 go in united and forcefully to the G20 to enlarge that commitment as quickly as possible amongst the major emerging economies, some of whom entirely ascribe to flexible exchange rates and are supportive, others who have a lot of work to do in this regard. Because in part it's a dysfunctionality of the international monetary system that causes that."
"Our sense of surveys of businesses, is that they continue to intend to hire. So it's still a positive outlook for employment as a whole. That said, we have just under 20 percent of our unemployed who are long term unemployed. And the unemployment rate, while 'only 7 percent' relative to other economies, is still higher than we need. So the issue is one of mismatch, and you see it most directly in the skilled trades in Alberta."
"This is ultimately an issue of pipeline and refining capacity. It is not our view ... that this is an issue of deficient U.S. demand."
"We expect the household debt (to income) ratio to stabilize around current levels. So it's a reasonable prospect that this year and in the coming quarters actually we will see a stabilization of the household debt ratio. And obviously we're watching this very closely, you're watching this closely. And this is one of the reasons why we see a more, quote, constructive evolution of the imbalances in the household sector and have adjusted our guidance on interest rates."
CARNEY ON PROGRESS IN REDUCING GLOBAL TAIL RISKS TO ECONOMY:
"There have been some very large so-called tail risks in the global economy. The risks around the euro, the risks around the fiscal cliff, which you mentioned. There has been substantial progress in reducing those tail risks. So even though we now expect the European recession to last longer, Europe is in a better place today than they were in October."
"Even though U.S. growth has been marked down and it may actually be lower than we expect depending on the outcome of the current budget negotiations, debt ceiling negotiations in the U.S., the quality of U.S. growth is better, because what's supporting U.S. growth right now is better quality activity in the household sector, in the housing market, the start on corporate investments. The sustainability of the position is better and so over the medium term, this augurs well for Canada."
"The shortfall is two-fold through 2012. Growth was less than anticipated, we think it's coming in under 2 percent. Also, GDP inflation was lower as well, so nominal GDP growth was materially less."
Reporting by Louise Egan, Randall Palmer and David Ljunggren in Ottawa, and Claire Sibonney and Solarina Ho in Toronto; Editing by Jeffrey Hodgson