UPDATE 2-Canada still has options to cut housing risk -cenbank head

(Adds comments from finance minister, Poloz quotes)
By Randall Palmer and Leah Schnurr
OTTAWA, Dec 15 (Reuters) - Canada's government still has
measures in its arsenal to reduce housing market risks if
necessary, the head of the Bank of Canada said on Tuesday,
though the country's finance minister said there were no new
plans in the offing for now.
Canada's housing market has been a source of concern as
prices and consumer debt levels continue to climb, driven by
years of low interest rates. After two rate cuts this year in
response to cheap oil, the Bank of Canada has faced criticism it
risks fueling the hot housing market.
The bank in its financial system review on Tuesday said
vulnerabilities in the housing sector have edged higher, though
last week's government measures to cool the sector mean the
system is better able to handle any troubles that may arise.
Asked whether there was a range of good options left for
adjusting housing policy after a handful of steps in recent
years, Bank of Canada Governor Stephen Poloz said there are
"quite a number" of ways the rules could still be changed,
though he did not elaborate.
The bank has maintained it is the last line of defense
against risky household debt. The newly elected Liberals last
week said they were increasing the downpayment required for
expensive homes, a move that is expected to affect a small
portion of the market.
For his part, Finance Minister Bill Morneau said the
government was not considering doing anything more at this time.
"We'll stay closely focused on the housing market and pay
close attention to Canadians' level of indebtedness and if
there's anything else that we think is the right thing to do,
we'll come back to Canadians with that information," he said.
The bank's review continued to list two key vulnerabilities
related to the household sector: high household indebtedness and
imbalances in the housing market.
Still, Poloz predicted a constructive evolution of housing
imbalances, while the overall risk level to Canada's financial
system was deemed to be roughly unchanged since the bank's last
report in June.
Poloz said it was welcome that there are targeted measures
that can address pockets of vulnerabilities in the housing
market without using blunt instruments.
The review said a severe recession with high joblessness
could cause major stress on the financial system because housing
prices would fall and households would be less able to service
their debt, but the probability of this occurring remained low.