Bank of Canada warns its low-rate policy poses risk to financial stability
Mark Carney, Governor of the Bank of Canada, holds press conference at the National Press Theatre in Ottawa on Wednesday, July 18, 2012. (Sean Kilpatrick / THE CANADIAN PRESS)
The Canadian Press
Published Thursday, December 6, 2012 10:43AM EST
OTTAWA - The Bank of Canada says low interest policies that it and other central banks have put in place are adding another layer of risk to the already stressed global financial system.
The Canadian central bank says near record level interest rates that have been in place since the 2008-09 recession are taking their toll on insurance companies, pension funds.
Low rates, it adds, are even increasing the appetite of investors to take risks in search of higher returns.
Bank governor Mark Carney has warned about the dangers of low interest rates -- which most Canadians consider a good thing -- sporadically in the past.
Still, this time the bank's governing council has thought the concern grave enough to add it to the list of risks facing Canada and the world.
The council says central banks have kept interest rates low because the alternative is worse -- that is increasing the cost of borrowing and undermining an already weak recovery.