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So what's causing the strong loonie? Oil prices? Faith in the Canadian economy?

It seems these rate hikes are going to make the loonie stronger.

Regardless of their past plans, shouldn't the BoC allow the deflationary pressures of high energy prices and a strong Cdn. $ to work their magic?

I've got an insect in my posterior about high interest rates.

The CAD is certainly helped by oil prices and the trade surplus. And the rising CAD has helped keep domestic inflation below what it might have been otherwise. That said, current interest rates are pretty low compared to their 'neutral' levels.

3% isn't high. At least, not to those of us who remember the 21% bank rate we saw in August 1981.

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