Strong loonie worries bank

The Bank of Canada is warning it is prepared to intervene to ensure Canada’s fragile economic recovery is not derailed by a resurgent loonie.

OTTAWA — The Bank of Canada is warning it is prepared to intervene to ensure Canada’s fragile economic recovery is not derailed by a resurgent loonie.

With evidence mounting that the economy is emerging from a short but deep recession, deputy governor Timothy Lane cautioned Tuesday that the recovery is still uncertain and the loonie’s strength is worrying.

“The Canadian economy is expected to start growing again this quarter,” Lane told a business audience in Kingston, Ont., adding that signs of growth are also appearing in the United States and the global economy.

But he noted that much of that growth to date has been on the back of government and central bank stimulus and he cautioned that should the loonie continue to rise, it could undermine the recovery.

“A persistently strong Canadian dollar could reduce real growth and delay the return of inflation on target,” he said.

“If a stronger dollar were to alter the path of projected inflation . . . we would need to take that into account.”

A high dollar hurts exporters because it makes Canadian exports to the United States more expensive for American buyers forcing them to seek cheaper alternatives and buy products from American or overseas companies instead.

Strength in the loonie has hurt the Canadian forestry sector particularly hard, squeezing sales of paper, lumber and building products, leading to mill closures and job cuts across Canada.

Just Posted

PHOTOS: Jazz at the Lake begins

The 16 annual event began Friday and runs until Sunday in Sylvan Lake

Lunchtime tunes on Alexander Way

Final concert of the summer

Clearwater regional firefighters in B.C.

Crew operating west of Prince George

PHOTOS: Samson Cree Nation Pow Wow

The Samson Cree Nation hosted its annual Pow Wow, celebrating youth last weekend

Come play at Medicine River Wildlife Centre

Grand opening of new playground

WATCH: Feasting at Red Deer Ribfest this weekend

Ribfest runs until Sunday at Rotary Recreation Park

Death Valley worker has seen highest, lowest temperatures

LAS VEGAS — Thousands of tourists descend on Death Valley each summer… Continue reading

Banff’s Sunshine ski resort upset with proposed guidelines from Parks Canada

BANFF, Alta. — An internationally known ski resort in Banff National Park… Continue reading

Folk singer Ian Tyson cancels show due to ‘serious medical situation’

TORONTO — Canadian folk singer-songwriter Ian Tyson has cancelled his appearance at… Continue reading

Judge lifts publication ban, revealing details about Fredericton shooting

FREDERICTON — Newly released documents reveal how last week’s deadly attack unfolded… Continue reading

Canada’s tax system unfairly favours wealthy, poll of CRA auditors suggests

OTTAWA — A recent union-sponsored survey suggests an overwhelming majority of federal… Continue reading

Canadian soccer captain Christine Sinclair continues to lead fight against MS

TORONTO — Christine Sinclair continues to have an impact on and off… Continue reading

In Franklin’s anthems, women heard an empowering message

NEW YORK — Aretha Franklin never saw herself as a feminist heroine.… Continue reading

Happy birthday Boler: 100s of cute campers in Winnipeg for anniversary gathering

WINNIPEG — Angela Durand sits outside her camper which is decorated to… Continue reading

Most Read


Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month