Premier will meet PM to save industry from the red-hot dollar
Premier Dalton McGuinty will meet privately with Prime Minister Stephen Harper today after warning Ottawa that interest rates must be slashed to cool a red-hot Canadian dollar that is hurting Ontario’s manufacturing industry.
This afternoon’s meeting at a downtown hotel follows McGuinty’s urgent appeal yesterday for the Bank of Canada to cut its key rate of 4.5 per cent when it next meets Dec. 4, to curb a loonie that is crippling Ontario manufacturers by making their goods more expensive abroad.
The dollar hit a new high of $1.10 US in trading before closing at $1.07.75 yesterday afternoon in Toronto.
McGuinty yesterday signalled he would be demanding help from Harper for Canada’s economic engine.
"From an Ontario perspective we would benefit from an interest rate reduction — something that makes the Canadian dollar less attractive on the international market," McGuinty told reporters at Queen’s Park.
Sherry Cooper, the chief economist at BMO Nesbitt Burns, said the high dollar is good for consumer spending power and rejected suggestions interest rates should be cut to slow the dollar’s meteoric rise.
"It is a pay raise for Canadians without question. Literally, living standards will rise as a result," she said.
Progressive Conservative Leader John Tory said McGuinty should stop complaining about Ottawa and starting cutting taxes as businesses have been demanding, because that would give Ontario’s economy a much-needed boost. NDP Leader Howard Hampton implored McGuinty to do something soon because "we are losing tens of thousands of manufacturing jobs."
Bank of Canada senior deputy governor Paul Jenkins acknowledged in New York this week that the high dollar and weaker U.S. economy — a major destination for Canadian exports — will exert a "significant drag" on the Canadian economy.