OTTAWA — Bank of Canada governor Mark Carney says the stimulus from government spending and his cuts to interest rates can be credited with saving Christmas this year.

In a year-end interview, Carney explained Canada would now be scrambling to inject money into the economy if it hadn’t already, and its lateness would have cost jobs and opportunity.

“We’d still be in recession...unemployment would be unquestionably higher and we would all have a much less merry holiday season,” Carney said. “The stimulus saved this Christmas, but it can’t save every Christmas, so we have to use it appropriately.”

Carney said low interest rates and government spending would continue to play a key role in the economy next year, with stimulus accounting for almost half of economic growth.

The governor warned that stimulus can’t float the economy forever and he remains mindful of the risks of a double-dip recession — where the economy crashes mid-recovery.

“We’re on track...we’re seeing better signs of domestic demand picking up, and going into 2010, I think the economy is picking up some momentum,” Carney said. “But it’s that handoff to the private sector that we need to see in 2010 in order to avoid the double dip.”

Carney said Americans will experience “the slowest recovery in the U.S. since the Great Depression,” and Canada will have to rely more on domestic spending and trade with other countries to spur growth.

“We’re getting a very limited amount of stimulus coming from demand in the U.S. and I think the reasons are obvious,” Carney said. “Consumers there...are going through a big adjustment. They’re saving when they used to borrow.”

While he is paying attention to U.S. monetary policy, Carney said he won’t harmonize his rate hikes to match those in the U.S.

“We have our responsibilities here,” Carney said. “Whatever happens there, doesn’t mean the same thing in Canada, that’s why we have the Bank of Canada.”

Carney remains concerned Canadians are taking on mortgages that will be unmanageable when interest rates rise, but he says he won’t act to halt a housing bubble.

“We do not have the mandate to adjust interest rates to target housing prices or any other specific asset price,” he said. “We are not changing the way we manage policy, but we do have to draw attention to certain trends.”

peter.zimonjic@sunmedia.ca