Arecent article in The Star has a very profound argument for a Rate cut and a Rate cut RIGHT NOW!
“Jim Stanford, chief economist for the Canadian Auto Workers union, told the Commons finance committee last week that the 300,000 jobs already lost in the manufacturing sector could double in the next few years if our dollar remains at par with the U.S. dollar. ”
When the finance minister was recently asked what he would do about the high Canadian dollar he promptly replied “The Bank of Canada has jurisdiction over monetary policy” Yes it was probably a cop-out but in fact true.
If he wasn’t a politician he might have said “The Bank of Canada probably can’t do anything?” You see if they cut rates too much or too quickly they will have a real problem with inflation, especially in the red-hot West, which could hurt the entire economy. They will in fact bring the dollar back to parity or around that, which will still hurt the manufacturing sector.
The sad truth is that somebody has to take the fall for the economy we are in and it is probably the beleaguered Canadian Manufacturing industry that should. Let’s face it we had more problems with that sector before the dollar began it’s rise. Global competition for labour and reduced wages in other areas makes it difficult for Canada to compete.
The Bank has certainly got to be careful with this one.
Greg
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