Ontario warns Dodge about raising interest rates

Last Updated: Wednesday, June 20, 2007 | 11:31 AM ET

CBC News

Ontario said Wednesday the high Canadian dollar has been such a big killer of manufacturing jobs, it wants the Bank of Canada to think twice before raising interest rates.

The province's finance minister, Greg Sorbara, said Bank of Canada governor David Dodge should keep the country's manufacturing base in mind when he next sets interest rates in July.

Dodge has hinted that rates will rise again as he tries to keep a lid on inflation. But higher rates — even the prospect of higher rates — boosts the dollar and makes it more difficult for export-oriented manufacturers to sell their goods south of the border.

"My arguments to Mr. Dodge today will be that he should be very, very concerned about the impact on Canadian manufacturers as he goes about the business of setting Canada's monetary policy," Sorbara said on his way into a federal-provincial meeting of finance ministers in Meech Lake, Que. Dodge is also at that meeting.

The Canadian Labour Congress estimates that 250,000 manufacturing jobs have disappeared since 2002, when the loonie began its long rise to its current level around the 93 cents US.