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OTTAWA — Canada’s financial system is in a relatively good place to weather any potential storms generated by a weakening global economy and the U.S.-China trade war, a top Bank of Canada official said on Tuesday. Senior Deputy Governor Carolyn Wilkins said the central bank is not forecasting a recession at home or world-wide, but reiterated the global economy is facing immense challenges that could spill over into Canada.

“In the unlikely event of a storm, Canada’s financial system is resilient and we are in a good position to deal with whatever comes our way,” Wilkins told a business audience in Montreal, adding even if the trade war doesn’t worsen, the dispute could cost around US$1 trillion in lost economic output by 2021.

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Last month the Bank of Canada — which has sat firmly on the sidelines for more than a year even as several of its counterparts, including the U.S. Federal Reserve, have eased — held its key overnight interest rate at 1.75 per cent as expected, but left the door open to a possible cut over the coming months.