Carney dismisses concern about inflation expectations

The future head of the Bank of England, Mark Carney, dismissed concern on Saturday about the danger of inflation expectations spiraling in Britain and elsewhere.

Carney, governor of the Bank of Canada, has been an advocate of flexible inflation targeting, and said last month that monetary policy was not maxed out in major economies.

He has said the Bank of England may need to commit to keeping highly accommodative monetary policy even after the economy and possibly inflation pick up.

Asked at a news conference on Saturday if there was a risk that inflation expectations in Britain and other members of the Group of 20 leading economies become unmoored because of loose monetary policy, he said: "The risks globally are deficient demand."

Pressed about the issue in Britain, where inflation has been above the UK's 2 percent target since December 2009, Carney said: "I think that's a question for the governor of the Bank of England, and his name is Mervyn King."

He was speaking after a meeting of G20 central bankers and finance ministers.

Separately, Carney declined to endorse an International Monetary Fund opinion that the Canadian dollar was 5 to 15 percent higher than warranted by long-term economic fundamentals.

"We don't comment on levels of exchange rates. We've noted for some time that the Canadian dollar is persistently strong," he said.

"It's something we take into account in the setting of monetary policy in Canada. It's one of the reasons why policy is as accommodative as it is."

(Editing by Mike Peacock)