‘Bank of Canada tracking impact of higher rates’

Bloomberg

The Bank of Canada gave the strongest indication yet it is concerned about the Canadian dollar’s recent gains, with a top official saying policy makers will closely monitor the currency’s impact on the economy.
In the bank’s first public remarks, since raising interest rates, Deputy Governor Timothy Lane spoke to a business audience in Saskatchewan where he outlined the factors that went into that decision — what he called “context.” They included stronger business spending and recent gains in foreign sales that had been helped by the Canadian
dollar’s weakening in recent years.
“We will be paying close attention to how the economy responds to both higher interest rates and the stronger Canadian dollar,” Lane said in a speech in Saskatoon, Saskatchewan.
The Canadian dollar had its biggest intraday decline since January as investors interpreted speech as an effort to pare expectations on rate increases. Up until today, investors and economists had been split on whether the central bank will tighten for a third straight meeting in October.
The Canadian dollar rose to its highest in more than two years after the Sept. 6 rate hike.
In addition to highlighting the currency’s strength, Lane also cautioned there are other considerations when it comes to higher interest rates, particularly their effects on indebted households.