Bank of Canada: Persistent U.S. dollar strength could force interest rates higher

Bank of Canada

The Bank of Canada is keeping a close eye on it and may “have more work to do” regarding interest rates if the U.S. currency continues to strengthen Governor Tiff Macklem said on Friday.

Since August, the Canadian dollar has lost 8.5% of its value against the U.S. dollar as the Federal Reserve’s aggressive rate hikes and the volatility on the financial markets drove up the worth of the safe-haven greenback.

If that persists, it “will mean that, other things equal, we’re gonna have more work to do on interest rates,” Macklem told reporters after International Monetary Fund and World Bank annual meetings in Washington. “We’ll be watching that closely.”