Industry committee  If the dollar...

Industry committee  It depends. Again, we have to make an assumption about the level of the dollar for our projection. If the value of the dollar goes up or down, the first question we have to ask is what causes this fluctuation. There is no simple or direct relationship such as that you mentioned.

Industry committee  We use the history of the variations of the dollar and the relationships between the factors that cause them. As I mentioned, after the Asian crisis, when commodity prices dropped, the dollar dropped. More recently, with a very strong global economy and the increase in commodity

Industry committee  No. According to the scenario you outlined, if the rate of the dollar increases due to the demand for commodities from emerging countries, the appreciation of the dollar will have a negative impact on other sectors of the Canadian economy.

Industry committee  Yes. But at the same time resources from the manufacturing sector will transfer to the natural resources sector in order to meet the increased demand for the products of that sector. There are adjustments and movements of resources from one sector to another. The challenge for t

Industry committee  Again, that's a very good but complicated question to answer. Fundamentally, in terms of running monetary policy, what we do by raising and lowering interest rates is to influence the level of total demand in the Canadian economy. So if you lower interest rates, you support or s

Industry committee  Very quickly, let's do two counterfactuals. Had we pegged the Canadian dollar during that period of the Asian crises, we would have had.... The decline in commodity prices was stimulating the U.S. economy. Had we been on a fixed exchange rate then, we would have had to raise in

Industry committee  The other point, perhaps, very quickly, is that when you look at balance sheets--

Industry committee  Yes. Sorry.

Industry committee  I'm going to repeat what I've already said. First of all, in the context of putting together our updated projection for the Canadian economy, we had built in a fair degree of easing on the part of the Federal Reserve, indeed easing beyond what they had announced the morning of Ja

Industry committee  I apologize, Mr. Chair. All these answers are long.

Industry committee  It is a complicated story, and if I try to cut through it and simplify it.... In Canada we have seen this big increase in what we call our terms of trade. This is because the products we're selling internationally are being sold at a high price, and that has generated a lot of in

Industry committee  I'm going to ask John to address this, because there is a real global dimension here, but I'll just say by way of introduction that Canada is running a current account surplus again because of the high prices of the products we sell. So globally, we're a net saver from that point

Industry committee  No. We have a target for the rate of inflation, but we do not have a target for the exchange rate.

Industry committee  I certainly can't comment on the reported comments of the minister. What we say in our policy report is that when you look at all the factors that have been influencing the Canadian economy, an exchange rate of around 98¢ is not inconsistent, in our view, with the fundamental fa