March 14, 2019 / 10:57 PM / 6 days ago

Bank of Canada sees rising global debt as top concern

FILE PHOTO: Bank of Canada Governor Stephen Poloz (R) and Senior Deputy Governor Carolyn Wilkins walk to a news conference in Ottawa, Ontario, Canada, July 12, 2017. REUTERS/Chris Wattie

OTTAWA (Reuters) - Rising global debt is slowing economic growth and making Canada, and the rest of the world, more vulnerable to another period of financial instability, Bank of Canada senior deputy governor Carolyn Wilkins said on Thursday.

Speaking to an audience of financial professionals and students in Vancouver, she noted that while the global financial system is in a better place than it was a decade ago, trade uncertainties and other geopolitical risks could throw things off track.

“Global debt now totals around $240 trillion - that’s $100 trillion higher than just before the financial crisis,” Wilkins said, adding: “That is a headwind to growth and makes us vulnerable to another period of financial instability.”

The Bank of Canada - which has hiked rates five times since July 2017 - stayed on the sidelines in its rate decision last week, warning there was “increased uncertainty” on the timing of future hikes and removing wording around the need for rates to rise to the neutral range over time.

The more dovish tone prompted money markets to price in the chance of a rate cut by year-end, with that probability hovering around 35 percent ahead of Wilkins speech. Wilkins did not mention the need for further rate hikes.

Reporting by Julie Gordon and Dale Smith

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