REUTERS

NEW YORK TIME is running out for monetary policymakers in advanced economies to prevent long periods of weakness, Bank of Canada Governor Mark Carney said on Friday.

While downplaying concerns that new bank-capital regulations could slow the recovery of some economies, Carney said there were still significant obstacles to increasing growth, and cited economic hurdles in Europe, the United States and Japan, “As a consequence, the advanced economies could face a prolonged period of deficient demand and weak nominal growth,” said Carney, who also chairs the G20’s Financial Stability Board.

“The central challenge for monetary policymakers in this environment is to prevent that from happening. The clock is ticking. The longer that crisis economies and their jobs markets remain moribund, the greater the risk of failure,” he told the US Monetary Policy Forum here, hosted by the University of Chicago Booth School of Business.

Carney praised the US Federal Reserve for being “appropriately and effectively radical by implementing a range of powerful unconventional tools.” He said the Fed was able to use the anchor of an explicit inflation target “to boost the aggressiveness of its communications strategy.

“We expect that the Fed’s elaboration of its longerterm policy goals will enhance the stimulative effect of its announcement that the federal funds rate is likely to remain at exceptionally low levels at least through late 2014.”